The mortgage industry and market is a very traditional one, so anytime there is a change to the market, there is likely to be a high level of interest. In autumn of 2017, NatWest grabbed a lot of attention by announcing that they are introducing a paperless mortgage.
This is being rolled out to people who apply for a mortgage over the phone but it is hoped that it will also be available to branch advisors by the end of the year. One immediate justification for switching to a paperless mortgage is the positive impact it will have on the environment. NatWest believes that they will use 4m fewer sheets of paper by switching to a paperless mortgage set-up. This is definitely good news and environmentalists will be happy to back this process.
Of course, the key benefit that will come from a digital mortgage application process is the reduction in time. Anyone who has made a mortgage application and then endured a torrid waiting period will understand the importance of speeding up the process. Lenders and financial institutions will also benefit from a reduction in the level of time it takes to process a mortgage, so there is something for everyone in the sector to take an interest in.
The NatWest believes that they can reduce their average mortgage application processing time by 10 days, which is definitely of interest. There was a trial run in late 2016 in Massachusetts in America where the paperless mortgage process took just three days, coming in at 16 days faster than the average time. This is a fantastic turnaround and is clearly something that can have a hugely positive impact on the property market.
However, it is essential that this faster pace doesn’t compromise on the security of the mortgage application process. NatWest have said that they have a number of strict policies in place to ensure that applicants are who they say they are and comply with all requirements. There will be a number of identification processes involved with digital mortgages and the company intends to have a video call with the applicant as well.
As long as the security of paperless mortgages is held up, you can expect a lot of people to feel more confident about what is on offer. You get the impression that many major players in the industry would like more confirmation about the security aspect before they confirm. Organisations like the Yorkshire Bank and Virgin Media look happy to hold off and while the Halifax and HSBC have said they are monitoring the progress of paperless mortgages, and that they already have digital parts to their mortgage application process, there has been no announcement from other firms following suit.
Given the digitalisation of so many aspects of modern life, it wouldn’t be a shock to see paperless mortgages become a major part of the industry. However, at this point in time, with so much focus on security, a lot more work has to be carried out in this field before most companies will embrace it. There is no denying that NatWest have shown innovation with the introduction of paperless mortgages but it is still too early to say when the industry will change to this style of working.