News that the NatWest is introducing a paperless mortgage in the United Kingdom has led many people to wonder whether paperless mortgages will change the industry. The institution is providing this service to all clients who arrange a mortgage over the phone and they intend to roll it out to their branch advisors before the end of the year.

When it comes to the benefits of a paperless mortgage, the reduction in printed paper is an obvious one, which will hopefully be positive for the environment. However, the real benefit for the majority of applicants will be the reduction in time it takes to review a mortgage application. This is the key selling point for a paperless mortgage but of course, there are some concerns about security and whether the mortgage will be taken seriously enough.

In the United States, there have been a number of surveys and studies taken on the topic of paperless mortgages and there is a belief that the industry is moving in this direction. A 2016 study undertaken by Xerox found that 92% of respondents (classed as mortgage experts) expected that there would be an increase in the use of electronic measures in the mortgage sector. There was also a 66% response indicating that a paperless mortgage would accelerate the closing disclosure part of the mortgage application.

A trial run showed the process can be accelerated

There was also a trial run in Massachusetts at the tail end of 2016 and this found that an electronic mortgage process could be concluded in 3 days, much shorter than the 16 days it takes for the traditional mortgage to be processed. Comparing this with the situation in the United Kingdom and the NatWest have stated that they expect paperless mortgages to take 10 days off the process.

If the paperless mortgage process for the NatWest is a success you can expect rival lenders to follow suit but at the moment, many major names are reluctant to move into this market. The Yorkshire Building Society say that they have no current plans to introduce a paperless mortgage while Virgin Money say that they are thinking about paperless mortgages but that they have no immediate plans to introduce them to their portfolio.

Some companies are keen to explore paperless mortgage options

Other companies like the Halifax and HSBC have said that digital processes are part of their current way of working and it is likely that this will continue to be the case in the future. The spokesperson for the HSBC also stated that they think they will provide a predominantly paperless mortgage process in the near future.

While the reduction in time taken to process a mortgage is a key reason to consider paperless mortgages, there is a feeling that many people want to make sure that this is a secure and robust method of arranging a mortgage. Given the sums of money at stake, security has to be at the heart of the process and rightly or wrongly, many people have concerns over online security and the digital process.

This is a bold move by NatWest and it is one that should be applauded. While we can all predict a large reliance on digital processes in the future, it is important that the system is used because it is the right option as opposed to being the new and fresh option. All eyes will be on the NatWest to determine if electronic mortgage applications are a viable option and it may be that we will have a much clearer idea on the future of mortgages in a years’ time.