It may not have been a story that piqued many people’s interest given the news on buy-to-let taxation, but in November the Council of Mortgage Lenders (CML) and Which? announced a new “tariff of mortgage charges”. This aims to introduce a standard format for how lenders communicate their fees, making it easier for customers to understand charges and compare deals.
Perhaps more interestingly, at the bottom of the press release announcing this, was a further note stating that the CML will be leading a project on agreeing a standard comparison method for lenders to adopt in 2016. Sound exciting yet?
Well for a technology business such as ours, it’s potentially very exciting. Presently, when lenders send out updates on their product ranges or criteria information to intermediaries and sourcing systems, they do so in their own format, with their own data structures and terminology. If taken to its logical conclusion, this action from the CML and Which? could be the first step toward an industry standard set of criteria options for a mortgage ‘product’ – the creation of a common data model that determines the criteria upon which products should be compared and selected.
The application of a common data model increases the opportunities for data transfer between lender and sourcing system, ensuring that product data held on the system is always 100% accurate. It would also make it far easier to build rule based logic across more product criteria, enabling the system to deliver more accurate product recommendations.
Clearly, there will still be variables and nuances in criteria models, and any move to this more structured approach shouldn’t come at the cost of product innovation.
If we see the emergence of a common data model for product criteria, we could also see the creation of a common data model for mortgage applications, and this is where it gets really interesting. At the heart of every mortgage application form, is the same data structure, but lenders have historically used different terminology and formats to capture what is often fundamentally the same information.
An element of common data structure across all lender applications would help facilitate the automatic mapping and transfer of client data from intermediary to lender system. This would give intermediaries the ability to instantaneously submit applications, and receive decisions from multiple lenders, without having to re-key into each lender’s portal. The efficiencies that this would bring to the whole mortgage process would be enormous.
This seemingly insignificant piece of news could end up being a great example of the law of unintended consequences. I wonder if the CML and Which? realise that they may have just started a revolution in mortgage technology?