‘First-time buyers are better off with big data-based mortgages?’
10 december 2021 • Deventer • 4 minute read
The current housing market is driving first-time buyers to despair. Even those who can easily afford expensive rentals often don't stand a chance when applying for a mortgage - even with substantially lower monthly costs. ‘Using source data can help break that,’ argues Jeroen Dekkers from IT service provider, Topicus.
Young homebuyers are struggling. House prices are soaring/skyrocketing, hefty overbids are the norm and lenders are keeping a tight hand on their purse. Only those who own a house with substantial surplus value, or have plenty of savings in the bank, still have a chance. The outlook for 2022 is not much better. Although the NHG (National Mortgage Guarantee) limit is rising to €355,000, due to inflation and rising energy prices, this autumn Nibud advised the government and the Lower House to further tighten lending standards. Meanwhile, interest rates are slowly starting to rise again, loans for, say, a private lease car or a study, is also taken into account when determining monthly expenses and the carrying capacity, and the mortgage interest deduction will be further reduced from 43 to 40 per cent as of 2022.
‘Aorta of mortgage lending’
Jeroen Dekkers is Businessline Manager Mortgages at Topicus IT service provider. That company is, the ‘aorta of mortgage lending in the Netherlands’ he says evocatively. ‘We provide the linked software that banks and mortgage lenders and many mortgage advisers work with. Mortgage advisers enter the consumer's data into their advice package which in turn forwards the application to ‘Force’, the Topicus system. They can look directly at the interest rates, contract forms and underwriting conditions of affiliated mortgage lenders. The assessment, credit check, underwriting test, monthly collection as well as clear real-time dashboards are also linked to it. In total, about two-thirds of all mortgage applications in the Netherlands go through Force.’
Behind those impressive amounts and numbers, a huge amount of data is available. Dekkers says: ‘We have come a long way. When I started at ING Mortgages 20 years ago, contracts still went by post and fax, and later by email. These days, a lot goes through online connected finance platforms. Even in many approval processes; only in the case of tricky exceptions or error messages humans get involved.’
‘These days, a lot goes through online connected finance platforms.’
Jeroen Dekkers Businessline Manager Mortgages
Access to source data
According to Dekkers, the next big leap forward in the mortgage world is called 'source data disclosure'. ‘In the process of applying for a mortgage, everything is data: the property, ourselves, our financial situation... A lot of that information still have to supply on paper or scanned, the so-called list of documents. For example, your employment contract, pay slips, your employer's statement, the valuation report and land registry data. A lot of paperwork, even though it is now largely digital. All that information is already scattered in computers, but not linked. For decades, the mortgage process has been nothing more than moving that data to lenders' lending policies for them to assess. You want to bring that policy forward and attach it to that data as early as possible. With source data disclosure, you can release it - once and only for your mortgage application. This makes assessing and closing your mortgage faster and smoother. The consumer has certainty sooner.’
Better tailoring and advice
Working with source data has great advantages for the whole chain, Dekkers predicts. ‘As a consumer, you are in control: only when you give your approval, your current data enters the system. Based on this, mortgage lenders, advisers and customers can immediately see which mortgage is possible, and at what cost. Or not, and why not. The steps remain the same but go so much faster.’
This also changes the role of free mortgage advisers - who currently assist about three quarters of mortgages. Dekkers explains: ‘In the current situation, an adviser can never have all the rates, policies and conditions in his head from all 43 lenders. With big data, they can - and the customer's data too. That way, they can make the best match and help the customer with the specific choices and their possible consequences, for example when it comes to mortgage type or term or fixed-interest period.’
Tailoring to the ability to repay
The advantages speak for themselves, Dekkers believes. ‘If the customer also shares data on their spending or, for example, saving behaviour, you get an even more complete and realistic picture of the applicant's spending and payment morality, and thus their creditworthiness. If the bank details show that they have money left over every month, or that they can already afford an expensive monthly rent, the bank can make a realistic risk assessment. And make a tailor-made assessment.’
‘If you have a complete picture of a customer's financial situation, including, for example, savings or any other assets, you can also assess the risks for the consumer.’
Jeroen Dekkers Businessline Manager Mortgages
Sharp outlook
Mortgage lending based on source data also gives a sharper view of possible future consequences of choices made now. ‘If you have a complete picture of a customer's financial situation, including, for example, savings or any other assets, you can also assess the risks for the consumer if something unexpected happens. If the value fluctuates, if you want to redeem, if you want to buy something bigger and more expensive, but with lower monthly costs.’
Source: NRC
Would you like more information?
Please contact Jeroen Dekkers
