Brokers are challenging lenders not to take their foot off the gas when it comes to innovation, with many urging them to consider the opportunities AI could bring to the sector, according to Nottingham Building Society.
That’s after new research revealed that the financial circumstances of borrowers are becoming increasingly varied as a flux in interest rates and stamp duty changes threaten the homeownership aspirations of millions across the country.
The research1 conducted by Nottingham Building Society, the mortgages and savings mutual, gathered the opinions of mortgage brokers across the UK, and found that 45% of brokers believe that, to date, mortgage lenders have not moved quickly enough to ensure they cater for the evolving needs of borrowers.
Borrowers cannot do it alone
Brokers reported that the circumstances of borrowers today aren’t the same as they were for previous generations, with 55% of brokers agreeing that customer criteria and incomes are becoming increasingly varied.
Yet with homeownership remaining the ultimate goal for nearly three quarters of the population2, a key area for concern among brokers is that a growing number of borrowers are having to seek support from others to be able to secure a mortgage.
The research found that a third of brokers reported an increase in buyers with fluctuating incomes, while the same amount reported an increase in multi-generational buyers (i.e. families pooling resources). A further 31% also noted an increase in buyers using government schemes like Help to Buy and Shared Ownership, highlighting the different channels of support prospective buyers are using to reach their goals.
The sector needs to catch up
At the same time, consumer sentiment reveals a growing frustration with outdated lending practices that fail to reflect the realities of modern homebuyers. Earlier research3 from Nottingham Building Society found that only one in five Brits believe, when it comes to homeownership, that banks and building societies have evolved to meet the needs of modern working Britain.
Six in ten (58%) brokers admit they’re open to the idea of AI playing a bigger role in the sector, with 30% believing it can play a role in mortgage applications but only if it is properly regulated, and a further 28% fully in support of it streamlining the process. It’s not all plain sailing though as a fifth (20%) of brokers remain sceptical about the use of AI in the mortgage process, either not wanting to see it involved until it’s safe and properly regulated or not wanting it to be involved at all.
While innovation is already rife in the sector, with new technologies like MQube, Lending Metrics, and Smoove able to provide more streamlined services to brokers, many argue that the mortgage industry has been slow to adapt.
To combat this, 57% of brokers believe that lenders must take proactive steps to develop new products that address the financial realities of today’s homebuyers.
There is also a strong call for mortgage providers to modernise their approach, with 26% of brokers seeking a more flexible lending process and 27% emphasising the importance of making mortgage applications quicker and less cumbersome. Nearly a quarter (23%) want to see lenders embrace technology and innovation to improve the overall customer experience.
Calling for more lenders to embrace the possibilities of technology, Praven Subbramoney, Chief Lending Officer at Nottingham Building Society said: “There is a pressing need for lenders to rethink their approach to affordability and mortgage accessibility. Borrowers today are navigating ever more complex financial situations and are becoming increasingly frustrated with the hurdles they face within the mortgage process. Our industry must respond with innovative solutions to help people traverse the system more efficiently.
“Only by listening to the concerns of brokers and borrowers alike can we achieve meaningful solutions which will improve the process and make homeownership more achievable. We urge lenders to take these concerns seriously and to prioritise innovation and flexibility across the sector, ensuring that all customers, regardless of their financial background, have access to the opportunities they deserve.”
