How financial data aggregation and digitisation are elevating mortgages

How financial data aggregation and digitisation are elevating mortgages

By Lauren Applegate 22 November 2021

After a period of slow growth brought about by the COVID-19 pandemic, the Australian property market is experiencing a major comeback, with house prices across the country rising at record levels.

A perfect storm of low interest rates and household savings at record highs have cumulated to drive increasing demand for property among new and seasoned home buyers alike.

In line with this bullish housing market, home loan lenders have also evolved, digitising the onboarding process to increase accessibility and create seamless customer experiences. Companies like RBA Group have revealed significant investments in technology are being made to streamline the home loan approvals process.

Home loan barriers to entry

The total present value of real estate in Australia has increased to $9.1 trillion, gaining a trillion dollars in just five months, setting a record valuation for the sector.

Unprecedentedly high property prices have increased the already significant barriers to entry into the Australian property market. So much so that research from Australia Talks, a think tank developed by the ABC, revealed that as many as 65 per cent of young people in Australia believe property ownership isn’t a possibility. In an effort to address this, innovative fintechs like OwnHome have started initiatives such as offering Australians the opportunity to convert a portion of rent payments into property equity.

It’s not just innovators that are taking action. In an effort to protect borrowers and counter rising risks in home lending, regulatory body Australian Prudential Regulation Authority (APRA) has told lenders it expects they will assess new borrowers’ ability to meet their loan repayments at an interest rate that is at least 3.0 percentage points above the loan product rate. This compares to a buffer of 2.5 percentage points that is commonly used by authorised deposit-taking institutions (ADIs) today.

Economists at Westpac believe this to be the first of a number of measures to restrain credit and the housing market, with the biggest shock for home buyers to come in 2023 where a rate hike is predicted to prompt house prices to decline by 5 per cent.

Overcoming inefficiencies in the lending process

To further exacerbate the high barriers to entry, procuring a mortgage is a notoriously lengthy and cumbersome process. Numerous data providers, archaic paper-based processes, and the necessary cross-verification involved – which when non-digitised can be prone to human error, all contribute to the long process time, with some mortgages taking up to 50 days to process, according to Infosys.

Digitisation, however, streamlines the entire application process, making it easier for the application to progress.

Data aggregation and innovation among digital native mortgage providers are doing just that, creating seamless customer experiences and speeding up the entire process. This is making procuring a loan more accessible and approachable.

By applying AI-driven lending and data enrichment technology, some lenders – such as Tic:Toc – have been able to reduce loan approval times from weeks to minutes.

By connecting a person’s banking data, lenders can instantly generate a complete picture of a household’s financial commitments, which means an assessor or user can make more accurate and efficient credit decisions. The process of deciding if an applicant qualifies for a mortgage has always been driven by data.

The opportunity to transform the process lies in digitising financial data aggregation and analysis functions undertaken by home loan providers. This reduces mortgage turnaround time and gives more people access to home loans, quicker, whilst ensuring borrowers are only lent to if they are in a financial position to service the loan without causing financial stress.

The role of digitisation

The post-pandemic recovery of the Australian property market has seen record growth in house prices, pricing many potential buyers out of the market. As such, the role of digitisation in streamlining the mortgage application process and making it as accessible and approachable as possible has never been more important.

by Lauren Applegate, director of customer success and marketing ANZ at Envestnet | Yodlee

As Envestnet | Yodlee’s ANZ director of customer success and marketing, Lauren’s role is centred around ensuring that her customers can innovate, succeed, and grow using best-in-market data aggregation, account verification, data enrichment, financial wellness, and credit accelerator tools.

With a background of executing marketing functions for online start-ups, as well as holding sales leadership roles within large insurance providers, Lauren has a great mix of experience to assist everyone from small fintechs to large financial institutions with their growth strategies.


The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet | Yodlee.

These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

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