2019 – Q2 | Further mortgage market shrinkage in the second quarter of 2019

By Banking, Hypotheekupdate, News

Mortgage revenue (-9.1%) and the number of mortgages sold (-12.5%) fell sharply

Compared to the same period last year, mortgage revenue fell by 12.5 percent in the second quarter of 2019, as consultancy firm IG&H’s Mortgage Update points out. Since the average mortgage loan only grows to a limited extent, mortgage revenue is also considerably lower than a year ago (-9.1 percent). As a result, this is the third consecutive quarter in which the mortgage market is shrinking on an annual basis.

In the past quarter, the average mortgage loan rose to a record amount of 317,000 euros – only a slight increase (+0.5 percent) compared to the first quarter of 2019 and a clear indication that growth of the mortgage loan is decreasing.

“There are signs across the board that the trend of strong growth in the mortgage market, which has persisted for years, seems to be broken,” says Joppe Smit, who works at consultancy and implementation firm IG&H. “This is the third consecutive quarter in which we observe shrinkage on an annual basis, although the second quarter of 2019 was better than the first three months of the year. Record year 2018 seems to remain unparalleled, which will put an end to the consecutive growth of the past five years.”

Mortgage refinancers grow increasingly important
Most mortgages (more than 31,000) are still taken out by existing homeowners. This is an 8-percent increase compared to the previous quarter. Mortgage refinancers show the strongest quarterly growth with 13 percent. “The number of mortgage refinancers continues to grow,” says Smit. “Mortgage lenders and consultants that specifically target this group can take advantage of this. On the other hand, it makes banks with large mortgage portfolios vulnerable. They will need to do more to retain these customers.”

Mortgage is one click away with an app
A notable trend in the mortgage market is the growing interest of banks and insurers in simplifying mortgage applications. The market is in the early stages of a digital data transition. “Right now, it’s not yet possible to take out a new mortgage on the sole basis of digital data,” says Smit. “Several sources with reliable and verified data have now been unlocked, but the number of sources should be increased. In addition, mortgage lenders should adjust their processes and systems in such a way that digital applications can also be processed immediately. It’s simply a matter of time before we can submit a complete mortgage application with a few clicks.”

IG&H is one of the initiators of ‘Handig!’ (Handy!). The purpose of this partnership between HDN, ING, NHG, Florius, ABN Amro, Rabobank, De Hypotheker, and IG&H is to make the process of applying for a mortgage as fast and complete as possible based on digital, validated source data. “We see that more and more parties are exploring digital possibilities,” says Smit. “DUO, for example, experiments with possibilities to make government data easier to share, but other parts of the government also follow these developments with interest. Developments will accelerate once they get on board, too.”

Sincerely,

Joppe Smit
Director at IG&H
E: joppe.smit@igh.com T: 0031 6 2035 2438

IG&H Mortgage Update – authors & data analysis:
Niels Roelofs (niels.roelofs@igh.com); Sophie Dijkkamp (sophie.dijkkamp@igh.com)

Considerable shrinkage in mortgage market in the first quarter of 2019

By Banking, Hypotheekupdate, News

The amount of mortgages issued fell sharply in the first three months of 2019. According to consultancy firm IG&H’s mortgage update, it was the number of first-time and existing homeowners in particular that dropped significantly. “Currently, we also observe a considerable decrease in the number of mortgage refinancers. In 2018, this group was still responsible for the growth of the mortgage market,” says IG&H’s Joppe Smit.

Click here to read the full report (in Dutch).

The average mortgage loan was €316,000 in the first quarter of this year – a 5.2-percent increase compared to the same period last year. This growth is mainly due to the sharp rise in mortgage loans for mortgage refinancers. In the purchasing market, the average mortgage loan remains virtually constant.

Mortgage revenue is shrinking

In the first quarter of 2019, the total mortgage revenue was nearly €22 billion – a 9.6-percent shrinkage compared to the first quarter of 2018, and the largest since 2013. Compared to Q4 2018, the decrease was as high as 22.8%. In previous years, the usual decrease in Q1 was partly due to a reduction in the maximum loan-to-value on the annual limit and the additional growth in the fourth quarter, which compensated for this.

This year, neither of these developments is perceived. “The sharp decline we currently observe is truly a deviation from the trend after years of growth,” says Smit. “Both the relatively limited housing supply and the difficult position of first-time homeowners are to blame for it.”

Growth in large banks’ share

The banks’ share increased by 2 percentage points to 64.1 percent. This growth mainly comes from the three large banks, which saw their combined market share rise by 1.3 percentage points to 51.3 percent. Investment funds enabling non-bank lending also saw their share grow – by 1 percentage point to 18.3 percent.

IG&H Dutch Mortgage Update: Mortgage market growth caused entirely by refinancers

By Banking, Mortgage Update, News

Dutch mortgage revenues grew in 2018 from 101 billion euros to 106 billion euros, according to consultancy bureau IG&H’s Dutch Mortgage Update. Compared to the fourth quarter of 2017, the number of mortgages shrinked considerably (8.7 percent). That was the largest decrease since the fourth quarter of 2013. As a result, the full growth in the mortgage market has come entirely from people who are not moving to new homes.

The number of mortgages also fell throughout 2018; by 2,1 percent to a total of 346.000. The average mortage sum few by  grew by 7.2% to 306,000 euros; the highest ever. Whilst the number of starters and existing homeowners in the market fell, the number of refinancers grew from 78,000 to 96,000 in 2018. This makes it the highest number ever. “These signs point to mortgage lenders not succeeding in retaining their existing customers”, says Joppe Smit, senior manager at IG&H. “These signs point to mortgage lenders not succeeding in retaining their existing customers.”

Lowest mortgage revenue growth fourth quarter 2018

The total mortgage revenue during the fourth quarter of 2018 was 28 billion euros; a growth of 2.2% over the third quarter. This is the lowest growth rate during this period since 2011.

Smit: “In previous years, there was additional market growth during the final quarter. This year we will not see as much of this. The lower number of granted mortgages and the smaller growth of the mortgage sums play a role in this. Moreover, the maximum lending capacity in past years was lowered at the end of the year, which always ensured extra volume during the final quarter. The lowering of the capacity did not happen this year.”

The shares of major banks during the final quarter sank to 50%, the lowest point in 3 years. Refinancers were responsible for 8.4 billion euros of the total mortgage revenue during the final quarter. The shares of starters (€5.9 billion) and existing homeowners (€13.8 billion) fell by 12 and 15 percent respectively compared to the fourth quarter of 2017. Foreign parties rose slightly to 4,7 percent. Both the largest grower and shrinker is an insurer this quarter. The market share of Nationale Nederlanden increases by 2.05 percent, while Aegon surrenders 3.31 percent.

Written by: Joppe Smit (Senior Manager), Lisa Klein Goldewijk (Banking Consultant) and Niels Roelofs (Banking Consultant).

Behaviour as the key for impactful transformation in the mortgage sector 

By Banking, News, Organizational transformation

The most impactful transformations for mortgage brokers focus not only on a new strategy, process or system, but also on the behaviour that goes with it. IG&H’s years of experience in the sector have proven this time and time again. Transformation trajectories often only accomplish a part of their original goals due to the fact that employees (and executives) eventually fall back into their old habits. How to prevent this as an organization? 

The mortgage sector is changing fast; technological developments are happening quicker and quicker, customer behaviour is changing and laws are being altered. Mortgage advice, for example, is changing towards a hybrid model. Clients begin the advice trajectory online so that the mortgage advisor can focus on only the most important decisions during their discussion. Smart software and data science technology are also making it possible to respond more effectively to the personal needs of individual clients. 

In practice, we often see advisors making little use of the new possibilities available to them. For example, the steps that a client has followed online are often not used, resulting in double the amount of work. It is also often the case that they do not know how to use new information, such as conclusions stemming from data science research, in practice. 

Consistent guidance

A new way of work calls for adjusted behaviour. It is often the case that employees are told to teach themselves new habits, which often results in them falling back into their old habits. Those who wish to create transformations with real impact on the organization will need to guide employees on the work floor consistently. If this does not happen, many applications and changes will be only partially utilized. 

How do you coach employees after a change in working conditions?

A few necessary basic principles for those who want to create lasting behavioural changes became obvious to us after countless transformation trajectories with mortgage brokers: 


If working conditions change, higher management often has the tendency to tackle problems that originate on the work floor directly using solutions which they have used before. Though this may sound logical, it can have a perverse effect. Previously used solutions have been proven to have an unsatisfactory effect. For this reason, do not immediately spring into action. 


Identify the root cause of the behaviour. We often see that the problem is literally the tip of the iceberg. The behaviour is merely what is visible to us. What is causing it to happen? Which convictions and motivations are strengthening or hindering? Begin working with this ‘undercurrent’ in mind. 

An often seen example is that employees fail to ask for help from each other or their executives. This results in them drowning in work or not sounding the alarm on time if they are experiencing problems. It turns out that people often do not dare ask for help. They are impeded by the belief that they should not disturb somebody else. 

This root cause is important; don’t tell people that they should ask for help more often, opt to discuss the problem during a meeting. Ask the entire team if they experience inconvenience when somebody asks for assistance. The majority of times this is not the case and this knowledge will ultimately lower the threshold. 

A second handle that we use often is the ‘change curve’. Everyone follows the same psychological trajectory from denying a problem, to frustration or resistance and, ultimately, acceptance. This is the case for both employees and executives, though some may start the trajectory sooner than others. The speed of the trajectory can also differ; one person can process a change within minutes, another within months. Some people may never be able to.

Higher management often recognizes the change much earlier than the rest of the organization. Therefore, they experience the change curve sooner. By the time the rest of the organization is informed, they have already accepted the change themselves and often cannot comprehend why the rest of the organization is not yet ready

Take, for example, a certain organization that went through a major change of direction. After months of meetings about what was needed, the management decided to share the outcome in a staff meeting. To their great displeasure, there was no immediate enthusiastic response. Half of the group did not see the impact and the other half wondered what this meant for their job. Taking people into the thought process at an early stage can help speed up the change curve.

Those wishing to prevent their employees from reverting told behaviour will need to guide the new work methodology on the work floor. Attention to both antecedents and consequences are of the utmost importance during this process. 

Shaping the correct conditions is a prerequisite for the creation of new habits. Employees must know what is expected of them and how they can achieve these goals. Organizations spend 80% of their energy on average on the creation of these antecedents. 

It is noteworthy that these prerequisites only play a small part in bringing about behavioural changes on the work floor. The largest part of the behavioural changes is caused by attaching consequences to the behaviour. This is crucial to changing somebody’s daily routine. 


In our experience, it often helps to let teams make explicit agreements over desired results and collaboration. Often, the existing situation has grown in a certain way, and it can do no harm to shake it up a bit. After this, create moments for feedback. For example, keep a frequent team dialogue, or ensure that an executive pays attention to the agreements, both written and behavioural.

Written by: Joppe Smit en Jorien Weerdenburg

What would happen if innovative parties work together using a new mortgage platform?

By Banking, News

Imagine one-stop-shop for everything you need for your mortage…

Finding your dream home on the first try and immediately having all the documents for your mortgage application at hand. It sounds like a dream scenario, something that people will enjoy in the distant future. However, this dream scenario is actually much closer than you think. Various innovative parties are already individually working on parts of this process. What would happen if they all worked together?

We have created a fictitious scenario in order to show the possibilities:

Step 1 | The search
Your dream home, based on personal data

As a consumer, your knowledge of the housing market is still limited. Suppose you want detailed advice based on your personal preferences and behavior: whether you should rent, sell/buy or renovate, where to live? By linking various data sources such as your travel time, CBS for demographic development and even your LinkedIn for the best chance of finding work; you will quickly find which home best suits your lifestyle.

As a consumer?

Finding the perfect location will be a better investment and also create a higher quality of life.
Innovative parties already offering solutions: Buurtkompas, Suburbia.

Step 2 | Bidding
Peace and security through personal digital support

This is where it gets exciting. Arranging everything when it comes to a new property or mortgage is always a hectic process, even if it is made as easy as possible. Doubt often can take the upper hand. Am I really making the right decision? Technological progress has made the whole process much simpler. Augmented reality tells you everything about the house and the neighborhood. A smart algorithm helps you to make the ideal bid, so that you are able to buy a house without overpaying. Once you have made the bid, you will be digitally (but personally) at the time and place that suits you best.

As a consumer?
No longer pay an average of €4,000 – €5,000 too much for your dream home.
Innovative parties already offering solutions: Blippar, 24 Sessions, Carevoice

Step 3 | Funding
Instant mortgage process based on source data

Applying for a mortgage is a complex process. It would be nice if lenders immediately knew who you are, so that the risk for all parties involved, from bank to seller, is reduced to a minimum. By basing the mortgage process on source data, working with standard credit scores and using block-chain technology, the costs of the current mortgage process for customer and lender can be reduced by more than 50%. You, as a consumer, immediately know where you stand.

As a consumer?

Faster mortgage process at less than 50% of the cost and effort.
Innovative parties already offering solutions: Handig!, Credit.com, iWize, Ockto

Step 4 – Renovating
Easily arrange everything through one platform

At the moment your keys are handed over to you, uncertainty flares up again. All of a sudden, you are faced with countless choices and you want to use your budget and time as efficiently as possible. Where can you find a good plasterer? Which carpenter has an agenda that fits with yours? How do you ensure that you set the right priorities? If a mortgage lender is able to connect a customer to the right contractors for the job using a new, special platform, it will save 20-25% of the customer’s money, not to mention the time saved.

As a consumer?
Being able to do more in your home by intelligent expenditure of the  20-25% of the saved time and remodeling budget.
Innovative parties already offering solutions: OSRE, Klushulp Centraal Beheer

Step 5 | Living
Get everything out of it effortlessly

Your house has become your home and your life keeps on changing. Before you know it, each month you’re paying 10-25% too much for your insurance, mortgage or energy bills. Based on a smart set of questions, you will receive personalised tips from your mortgage lender at an advantageous time, which you can then validate at the click of a button. For example, you can automatically adjust the value of your home, which in turn can immediately lower your monthly costs.

As a consumer?
Save money for enjoyable things, by reducing your monthly fixed costs by 10 to 25% through smart tips.
Innovative parties already offering solutions: De Energiebespaarders, Nationale Hypotheekbond

 

Creating an effective consumer journey is now of the essence, as mortgage lenders still often think using the possibilities of their own mortgage platform. As you can see, technology is not a limiting factor, but rather an enabler.

With a unique combination of sector expertise and the Technology, Analytics and Organization Transformation competence teams, IG&H is well-positioned to connect the many separate initiatives into an integrated, customer-centric view and to turn them into a valuable and memorable customer experience. The first organization that takes this step, will gain a substantial (extra) part of the Dutch morgage market.

Would you like to know more about the possibilities? We will gladly assist you.

Bas de jong                   Jules Hoppenbrouwers

Manager Banking            Manager Digital Customer Experience
b.dejong@igh.nl              j.hoppenbrouwers@igh.nl

Large Dutch bank digitalizes mortgage processes

By Banking, Casestudys, Clientcases

What they wanted
“Consumers demand speed and convenience when applying for or modifying a mortgage. Having insight into and control over the mortgage process is increasingly important in this regard. To remain competitive, we must respond to these needs. At the same time, we are faced with the challenge of complying with the ever-tightening (European) regulations. What we want is to be ready for a mortgage market that will change radically as a result of digital developments!”

What we did
As a forerunner in innovation, we use our proven approach to set organizations and the mortgage sector into motion. For this bank, we translated the view on source data usage into a new service provision concept and a setup of underlying processes. Then, we accelerated the implementation using our toolset, which we have started to build since the launch of our initiative ‘Handig!’ (Handy!). In addition, we ensured that the organization was on board by working in an Agile manner.

What we achieved
With our help, the organization has adopted a data-driven way of working. To better serve customers, it now uses data from reliable sources instead of paper documents. Moreover, consumers enjoy more speed and convenience. Submitting an application is simple, and they get a definite answer within one day 80% of the time. As a result, the decision on buying a house is an easy and fast one to make, which has led to an increase in revenue. Moreover, focus has been placed on efficiency and customer-orientation. Mortgage applications have increased by 20% in three months, while cost has decreased by more than 50%. In addition, acceptance has become much more reliable: the risk of fraud has reduced significantly.

What they said
“IG&H had the vision, knowledge, and experience to help our organization digitalize the mortgage process. We are now a frontrunner in a radically changing mortgage market, and we increased our market share by 10%!”