The lending process has changed considerably in recent years, but advisers say there are still opportunities to make it faster, fairer and easier to navigate
We asked three mortgage advisers what three things they would change about the lending process and why. While their priorities differ, several common themes emerge - better digital connections, greater consistency and a stronger focus on existing customers.
Claire McArthur – Connect the systems and clarify the grey areas
For Claire McArthur (pictured, right) of Claire McArthur Mortgages, one of the most obvious opportunities lies in creating a more digitally connected application process.
Despite advisers gathering and organising detailed client information electronically, applications are still commonly submitted to banks as PDFs. That can leave lender staff re-entering information into their own systems, adding time and another potential point of error.
“It’s still a bit crazy that we gather all the information from a client, send it to a bank as a PDF and then someone at the bank has to re-enter all that information into their own system,” McArthur says.
“It would be a huge timesaver if adviser CRM systems could connect directly with bank systems.”
She says Australia is already further ahead in this area, with people there often surprised to learn that New Zealand advisers continue to submit PDF applications. And because each lender uses different systems and every application is presented differently, bank staff must sift through the information supplied and capture what they need.
Creating secure connections between adviser and lender systems could reduce duplicated work, improve accuracy and allow both sides to spend more time considering the client’s circumstances.
McArthur’s second priority is improving digital identity verification and account opening. Some lenders handle these processes well, while others still require clients to visit a branch - an increasingly inconvenient requirement as branches close or operate reduced hours.
Although advisers must confirm they have verified a client’s identity, the digital tools available to do this can be expensive, particularly for smaller advice businesses. More accessible and affordable technology would make onboarding easier for clients without weakening the safeguards lenders require.
Her third change would be greater clarity around business-purpose lending, particularly where borrowing is secured against residential property.
“This remains a grey area, and there are not enough tools or clear guidelines available to advisers,” she says.
Banks can classify business lending differently and take varying approaches to the documents, financial information and allowable add-backs they will accept. And while one bank may allow depreciation to be added back to income, for example, another may not.
“Small and medium-sized businesses are the backbone of New Zealand, and much of their lending is secured against residential property,” McArthur says.
“Stronger and more consistent processes and policies in this area would help advisers structure applications with much greater confidence.”
That consistency is especially important in a market where lenders’ policies and appetites can change regularly. A bank may have a suitable policy for overtime or bonus income but little appetite for a particular industry. Another may accept a lower deposit on a lifestyle property until it reaches an internal lending limit and tightens its criteria.
McArthur says navigating these differences is now a significant part of an adviser’s value. However, she believes the industry must also continue improving financial literacy so consumers are better equipped before they begin the lending process.
Angela Downie – Create greater consistency from application to settlement
Angela Downie (pictured, left), Director and Financial Adviser at Platinum Mortgages, would also like to see greater consistency – but her first focus is on the way applications are assessed.
Every lending application is different and credit assessment will always involve professional judgement. However, Downie says advisers can encounter noticeably different levels of questioning and information requirements depending on the individual assessing a file.
“Greater consistency would give advisers a clearer understanding of what needs to be supplied upfront, reducing additional requests and helping applications move more efficiently.”
Her second change would be greater standardisation of lender forms and processes.
“Each lender understandably has its own systems, but there are a lot of different forms, requirements and points of contact to navigate from application through to settlement,” Downie says.
“Greater standardisation in some of these areas would reduce administration for both advisers and lender teams and allow more time to be spent helping the client.”
That does not necessarily mean every lender must use an identical credit policy or lose the ability to consider applications individually. Instead, a more consistent approach to routine administration, documentation and communication could remove avoidable complexity without limiting lenders’ ability to make their own credit decisions.
Downie’s third priority is continued flexibility, coupled with greater consistency, in the treatment of self-employed income.
“Lenders can take different approaches to business financials and allowable add-backs, including interest, depreciation and home-office expenses.
“More agreement around commonly accepted add-backs would help advisers understand how income is likely to be assessed, while lenders could retain the flexibility to consider the individual business and the story behind its figures.”
When it comes to elements of the process that could have the most valuable and practical impact on the outcome for clients, Downie says it would be streamlining what happens after approval.
“Once clients have confirmed their loan structure, fast onboarding and prompt delivery of loan documents to their solicitor can make an enormous difference. At this stage, borrowers are often balancing finance deadlines with pre-settlement inspections, moving arrangements and other pressures.
“Reducing unnecessary touchpoints or delays can take a lot of stress out of what is already a very busy time for them,” she says.
Ultimately, Downie thinks the best changes are the ones that make things easier for everyone – clients, advisers and lender teams – working to get the borrower through the lending process as smoothly and confidently as possible.
Zack Hartshorne – Reward loyalty and give advisers better visibility
For Blenheim-based Guardian Smith mortgage adviser Zack Hartshorne (pictured, centre), the first change would be a stronger focus on retaining and rewarding existing bank customers.
Banks may offer substantial cash incentives to attract new borrowers while providing little or nothing to retain customers who are already on their books. Hartshorne would like to see that balance shift, with existing clients offered greater recognition for their loyalty.
“Banks can sometimes pay as much as 1.25% of a loan to acquire a new client, but offer little or nothing to keep an existing one,” he says.
Some borrowers would still move banks to access a different product, such as an offset account, but Hartshorne believes better retention offers would at least help customers feel valued by their current lender.
His second change would be much greater use of artificial intelligence to remove manual work from the lending process.
“Advisers are already using AI more frequently in their businesses, but there is still considerable scope to automate repetitive administrative tasks and accelerate applications for clients, advisers and lenders,” he says.
Hartshorne’s third priority is lower interest rates and a banking sector that returns more value to New Zealanders, arguing that bank profitability should be considered alongside the financial pressure facing households and the wider economic benefits that could come from leaving more money in the hands of borrowers.
Rates, inflation and the direction of the economy remain among the biggest concerns clients bring to him. The question he hears repeatedly is – what will interest rates do next?
“The best interest rate might be the best today, but if rates have gone up by 0.5% when the loan comes off that term, was it really the best option for that client and their situation?” he says.
“Loan-to-value ratio restrictions and a lack of financial education are also significant hurdles. Often most people are in a position well before they reach out to buy a house, but they just don’t know it.”
Hartshorne would also like advisers to have secure access to basic, up-to-date information about consenting clients’ loans, including balances, suffixes, terms and interest rates.
At present, much of that information must be entered and updated manually. An API connecting banks with adviser systems could transform the way advisers provide ongoing service and identify opportunities to help clients.
Hartshorne is not suggesting advisers need continuous access to clients’ individual transactions. Instead, a daily or weekly feed of basic loan information could allow them to provide more timely, proactive advice between applications and annual reviews.
Removing the friction from lending
While their priorities differ, all three advisers want a process that is more connected, consistent and client-focused. Better technology could reduce manual work, while clearer policies, fairer pricing and improved access to information would help advisers support clients more effectively.
Human judgement will always be central to lending, particularly for complex applications. However, the opportunity is to remove the avoidable friction surrounding it, giving advisers and lenders more time to focus on achieving sound, sustainable outcomes for clients.
