The COVID19 lockdown brought the UK’s housing market to an emergency stop. It has now started moving again but still has to keep the Coronavirus very much in mind. At present, it looks like this is going to be the case for the immediate future at least, but what does the longer-term future hold for the mortgage industry?
A move to (more) remote working
While the government has called for office workers to return to their desks, the response from business has been varied, to put it mildly. Some business leaders are clearly eager to get staff back together. Others seem to be perfectly happy to continue with home-working, at least part of the time.
For the financial services industry, including the mortgage industry, working from home permanently could raise a lot of serious challenges. In particular, it raises questions about physical security and data security. These challenges may not be insurmountable, but they may take time and effort to resolve. In other words, it may not, currently, be possible for mortgage professionals to be fully and permanently remote, even if it was what they wanted.
On the other hand, it may be very possible for mortgage professionals to interact with clients (and colleagues) remotely. The age of the client will not necessarily be a barrier to remote interaction. This was demonstrated by the equity-release sector, which has been using telephone and video calls to replace in-person advice sessions.
The benefit of this to the business would be that advisors could be based in a central location rather than needing to travel to clients. The benefit of this to the customer is that (part of) the cost-savings from this could be passed on to them. There could also be a proviso that customers who felt they really needed a face-to-face advice session could still receive a personal visit from an advisor.
Increased reliance on virtual valuations
Having a reliable system for home valuations is key to a functioning property market and hence to a functioning mortgage market. That said, however, there is a difference between “reliable” and “unchanging”. The fact that the mortgage market has been able to continue functioning without physical valuations shows that they are not always necessary. They may be desirable, but that raises the question of how much value should be placed on a want rather than a need.
This may be a question the mortgage industry has to start answering sooner rather than later. The answer may be to keep using virtual valuations for lower-value and/or standardised properties and use physical valuations for higher-value and/or unusual properties. This approach could potentially reduce costs and streamline processes without placing the lender at serious risk of either deliberate fraud or human error.
More flexibility for verifying a person’s identity
Even in the 21st century, a person’s signature can have huge legal significance. Admittedly for really important documents, like wills, a person’s signature alone may not be sufficient. There may need to be additional witnesses and/or notarisation.
This fact created a challenge for the legal profession, which had to come up with a way to allow legal documents to be signed and witnessed while maintaining social-distancing rules. The current approach is to use “window witnessing”. Essentially, the relevant person signs a document while being literally watched through a window. The person then hands over the document to the witnesses who sign it themselves, while maintaining social distancing.
Although this deals with the immediate situation, it doesn’t exactly take advantage of the capabilities of technology. Going forward, the legal and financial services industries, including the mortgage industry, may benefit from pushing for more use of digital signatures and, if necessary, video-witnessing.
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