With experts predicting a sharp rise in the number of homes being repossessed from 2,900 in 2020 to a staggering 22,300 by 2022, it’s no surprise that many mortgage providers are seeking new ways to strengthen their processes to ensure better outcomes for consumers.
Here, Karen Emmett, head of consumer products at Aryza, discusses the steps organisations must take to improve engagement and minimise the chance of missed payments.
Anyone working within the mortgage sector will understand the importance of an efficient and effective collections process, especially at a time when consumers are facing increasing financial pressure.
The FCA’s Financial Lives Survey, published in February 2021, highlighted a number of worrying trends that mortgage providers must take into consideration.
The report found that 10% (5.1 million) of those surveyed were, ‘constantly or usually’ overdrawn, with many using their overdraft facility to pay for essential living expenses, such as their rent or mortgage payments. Similarly 20% of mortgage holders (3.5 million) had outstanding mortgage debt at least four times their annual household income.
This was a significant increase on the 14% of mortgage holders when the survey was first conducted back in 2017.
Of those surveyed, 2%(1 million) had a second charge mortgage, with 86% of these adults having also borrowed on unsecured credit. Even more worryingly, 25% had also used high-cost credit over the past 12 months.
With payment holidays and other support initiatives having now come to an end, there are a number of steps mortgage providers must take to avoid thousands of UK consumers falling behind on their monthly repayments.
The role of technology
Specialist technology has a key part to play in helping mortgage providers better assess and process loans, ultimately leading to more positive outcomes for consumers.
Loan origination software can significantly speed up the loan application process by providing a fast, accurate and efficient way to assess borrowers and evaluate the risk of a loan.
In today’s fast-paced world it’s important that lenders can process and approve loans at speed, however they must ensure regulatory compliance is followed and that consumers aren’t sold an unsustainable loan.
The ability to create and manage loan portfolios digitally, will reduce the administrative burden many mortgage providers are currently facing, with the deployment of fully automated systems also minimising the overall operational costs associated with managing mortgage and remortgage applications.
Promoting positive engagement with consumers
No matter the digital systems in place, if you are unable to engage with customers on the brink of arrears it’s unlikely that you will be able to support them.
This has been a long-standing challenge and it’s entirely understandable that those struggling might be reluctant to speak to someone on the phone or in-branch – making technology a win, win solution.
For businesses, the resource required to send reminder messages and engage with those who have fallen behind on their monthly payments is reduced. For the consumer, knowing that they won’t have to have a difficult conversation over the phone or in-branch will also remove a big hurdle that might previously have prevented them from seeking help.
It’s also important that consumers feel in control of the process and the options available to them. Via specialist technology such as Aryza Recover, users can log in and view an easy-to-understand breakdown of their repayment plan, the options available and, if necessary, access advice or guidance.
With the rising cost of living and the impact of the Covid-19 pandemic still taking a significant toll on the nation’s finances, it’s really important mortgage providers are able to evolve with the ever-changing needs of the market.
Without secure, cloud-hosted technology this becomes a real challenge and over time, is likely to impact their ability to support and engage with consumers.
To find out more about the Aryza software and how it can help your business, please visit https://www.aryza.com/aryza-recover/