New mortgage can see approvals in as little as 60 minutes and has taken off in APAC
2021 saw the home loan market in New Zealand explode, with house prices rocketing and the chances of a fast mortgage approval going through the floor.
Advisors became accustomed to at least two to three weeks for home loan turnaround times - with many lenders going much longer than that – compared to just a few days in pre-COVID times.
Now, with rates rising after a long period of falls, the length of loan approval times is of great importance to the advisor community.
At the current pace of interest rate rises, the difference between the fastest mortgage approval in New Zealand and the longest could mean thousands of dollars over the life of a loan.
The digital mortgage market in New Zealand is still in its infancy, but if the country goes the same way as the rest of the APAC region, advisers will need to familiarise themselves with how it works sooner rather than later.
Read more: Auckland property prices likely to fall in near future
One key example of the potential of the digital home loan market is to be found in Singapore. FICO, one of the biggest fintechs in the world, launched its digital mortgage there during the height of the 2021 lockdowns and saw NZ$750 million in new originations in just three months.
The cornerstone of its proposition was an approval time of just 60 minutes, with FICO’s tech platform bolted on to local bank OCBC in a full process product that used data analytics and AI to make decisions.
“Earlier, the digital option was happening but it was only for certain segments – particularly the most-savvy on the digital uptake,” said Aashish Sharma (pictured), segment leader for risk lifecycle and decision management, to our sister publication Australian Broker in an interview last year.
“What we saw immediately was behavioural change, because everyone wanted a bigger house due to work from home. But you couldn’t buy a house, as you couldn’t go out in the lockdown. That’s where OCBC ramped up and offered this instant mortgage.
“The results speak for themselves, because we did $700 million USD in loans during the period, and 30% of OCBC’s total yearly business through it.
“The consumer was happy and confident that they were able to initiate from their living rooms and, where there was a need, we would do some audio or video sessions. The oral feedback was fantastic.
“This will be a value chain. We are thinking of ecosystems and partnerships, and that’s what we’re seeing in Southeast Asia.
“Banks are going after multiple agencies, be that broker or retail. That concept of partnership is what is driving digital innovations. We believe that there is a role for everyone to play in delivering value.”
