How can technology help to meet the challenges of the MMR?

[SPECIAL FEATURE: John Penn, Head of Mortgage Proposition at software provider Intelliflo, gives his thoughts on how technology can be used to help meet the challenges and opportunities arising from the MMR.]

Related topics:  Mortgages
Amy Loddington
13th March 2014
calculator paperwork business office work laptop

Mortgage advisers and lenders are well aware of the MMR and its requirements, why it is being used to ensure clients can afford their future debts, and also the impact that these regulations will have on their businesses. Despite this, it is likely there will be a period of adjustment that will affect lenders, mortgage advisers and clients in a profound way, particularly for the first six months post the MMR.

36% of lenders are concerned about the practicality of implementing the regulations into their IT systems in a cost-effective way. This is exacerbated by the fact that 57% of lenders are anxious about not being able to recruit good, well qualified advisers. It is likely that in the first six months after the MMR, lenders will increasingly look to mortgage advisers for new business. In 2013, the split was 40/60 in terms of mortgage business carried out direct from a lender compared to business done through a mortgage adviser; post the MMR this is likely to shift initially to 30/70 in favour of the mortgage adviser.

Mortgage advisers will therefore have to build closer relationships with lenders to understand their changing requirements, as these relationships will be vital in the first months post the MMR as lenders adjust to the new environment. But 83% of mortgage advisers feel there has not been sufficient guidance from lenders to date on how this will happen.

Mortgage advisers are facing a number of new pressures. Firstly, lenders will require all applications to be submitted in a set format. Secondly, mortgage advisers will have to deepen their relationships with their clients to ensure affordability; 50% of mortgage advisers feel that more applications will be turned down because of stress testing relating to this. Thirdly, the time involved in the sales process between mortgage advisers and clients will increase post the MMR, with a move away from non-advice. So with mortgage advisers’ available time becoming more precious, one key question they need to ask themselves is whether their existing systems are fit for purpose for the new demands post the MMR?

21st century, cloud-based technology can help. The right software will be able to guide the client and mortgage adviser through the process of gathering information in an effective, compliant way. Mortgage advisers can be confident that their cases will be submitted in the right format and in turn they will be rewarded with quick service from lenders, which will increase client referrals.

Cloud base systems also enable users to access up-to-date information anytime, saving on processing time, additional hardware and support costs. With systems that integrate with third party services, mortgage advisers will only have to submit application information once in terms of sourcing a mortgage and protection, removing an extra layer of administrative burden. Some systems also offer rate shock stress testing as a built-in part of the application, which provides  the mortgage adviser with the opportunity to discuss the potential hazards of a rate increase with their clients.

This enhances the services the clients  receive ensuring a transparent, well-informed, speedy service, allowing them to understand their personal responsibilities for their future debts. For mortgage advisers willing to adopt these new ways of working, admin times and costs can be significantly reduced, meaning that although the MMR will bring in increased regulation it also has the potential to lead to increased profitability.

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