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This year we had conversations with a record 46 lenders to gain an understanding of how they use technology across the mortgage origination journey.

The insight it offers spans topics from the Financial Conduct Authority’s Consumer Duty rules, net zero targets and environmental regulation, to affordability trends and political context.

Consumer Duty is one of the most significant regulatory changes for the mortgage lending industry in recent times and we were keen to understand how it had impacted the lenders’ business. 

The feedback we received from this was interesting with many lenders seeing Consumer Duty simply as an extension of their current practices and culture, with others agreeing that its processes had been sharpened up since its introduction. 

However, one thing they all agreed on was that implementation of Consumer Duty was not without its challenges. Almost without exception, lenders remarked that the operational burden of measuring and evidencing compliance with the new rules had been considerable and, in some cases, far greater than had been originally anticipated. Outstanding areas of uncertainty revolved around those parts of the process that are external to lenders’ core business such as broker fees and vulnerability. Areas like these are clearly evolving and will prove fascinating to revisit as processes, expectations and regulatory requirements bed in.

We also gathered insights from lenders about their green policies, such as incentives for green home purchases or retrofit/improvement loans. The general consensus is that consumers have little appetite for investing in retrofitting property at the moment, and that this is largely driven due to recent increases in the cost of living. Due to this, lenders remain sceptical about what they could do to spur homeowners on to ‘do more’, since the costs involved may not provide the necessary return. However, there is a positive feeling among some that there is value in sign-posting borrowers to better behaviors. For the most part this year, the focus of green activity has been on understanding back book performance and the liabilities of Scope 3 emissions risks.

The topic of AI provided some interesting talking points, with the majority of lenders seeing it as something that will complement human roles rather than take over from them. At least for now, AI is in reality viewed as machine learning and is hugely dependant on the quality of the data it uses. The main concern among lenders already implementing AI is that they are keen not to lose the human touch completely.

While it seems that lenders are increasingly engaging with ways that AI can work within the business, what we also reveal is the big question that is not being asked by lenders when it comes to AI – namely how it will impact their borrower base.

With cyber security and digital fraud threats growing year on year, we were keen to find out if lenders foresee any problems with integrating systems and digitalising their business. Unsurprisingly, the answer to this varies very much on the lenders perceived exposure to threat. The risk of huge data leaks was highlighted as a worry among larger lenders; however, the general view is that cyber security and fraud would not deter lenders from doing the right thing.

The lenders also gave us some valuable insight as to what they would do if they had additional money to invest in their mortgage process tomorrow. The answer largely reflected a running theme of this survey, which was a focus on the application and underwriting areas of the business. 

Of course, there was plenty more to uncover such as conversion ratios changing as interest rates have climbed, and brokers and their applicants pulling applications far later in the process. 

We are eternally grateful to our participating lenders and flattered that this report, we have been told countless times, has become a bellwether for the health of the industry in many ways. We sincerely hope you get as much out of it as you have done previously.

Read our 2024 Mortgage Efficiency Survey, and our on-demand webinar can be viewed here.