2025 looks to be a year of steady growth for mortgage lenders for house purchases and somewhat of a resurgence in remortgage volumes. Subdued volumes over the last couple of years, driven by economic and political uncertainty, as well as constraints on affordability due to high interest rates, must surely have fuelled a pent-up demand for mortgage borrowing over the next 12 months?
Latest figures from UK Finance for 2024 and 2025 show that lending for house purchases grew by 11% in 2024 to £135bn and is forecast to continue a 10% trajectory in 2025 to £148bn. It’s worth noting that external remortgaging, which shrunk by 10% from 2023 to 2024 to £59bn, is forecast to come back significantly by 30% in 2025 to £76bn.
Looking ahead, lenders have an opportunity to rebuild momentum and meet their market share targets set against, let’s hope, a backdrop of a more benign rate environment and a period of greater stability. But they will be in strong competition with each other especially on remortgages. In this battleground, competing on customer experience differentiation may be more successful than on rates alone.
When it comes to competing for mortgage customers, the traditional lever that lenders pull is rate. It’s an effective tool, but it also impacts margins and other lenders can quickly follow suit. Lenders can also attract customers through lending criteria, but this is somewhat restricted by risk appetite. When it comes to standing out in a competitive market predominantly sourced through brokers, however, quick decisioning and certainty early in the process to support a good customer experience is key. This is especially important for remortgages where there isn’t a house move going on in parallel to distract from the timelines.
So, what if there was a way of improving customer experience at the same time as reducing operational costs without compromising risk?
At CLSQ, we think we have come up with just a solution with the launch of VerifyQ, a transformative instant insured property valuation that improves the customer journey whilst lowering operational costs.
VerifyQ empowers lenders to significantly increase instant valuations, potentially doubling current AVM automation levels, and reducing physical valuations to the properties that really need assessment. In turn, this helps to enhance the broker/customer experience by giving faster lending decisions, earlier in the mortgage journey. It’s made possible through a combination of CLSQ’s advanced data modelling capabilities and insurance-backed property valuations, underwritten by Aviva,.
This unique service validates property valuations alongside the lender’s AVM, using a purpose-built insurability model that incorporates a range of data sources and lending criteria. Where criteria is met, the insurance protects the lender for five years against losses on outstanding loan amounts in the event of repossession. And without the burden of proving a negligent act, error or omission, as is the case for valuers’ professional indemnity insurance. VerifyQ can be used for purchase mortgages, remortgages, product transfers and for any residential property type as well as homeowner and buy-to-let lending.
In a competitive mortgage market, we believe that VerifyQ can provide a genuine point of difference to customer conversion and cost efficiency. It also aligns with lenders’ environmental, social, and governance (ESG) goals by reducing carbon emissions resulting from physical valuations.
Whilst VerifyQ is relatively new, it has already demonstrated its potential with one of the UK’s largest mortgage lenders, Nationwide Building Society. Rob Stevens, Head of Property Risk at Nationwide, shared his experience, saying: “Nationwide Building Society has used CLSQ’s extensive property data services as part of its mortgage processing for a few years now, and in the process, we have built a strong collaborative relationship with them. When they introduced their VerifyQ instant insured property valuation product, I could see the potential to increase automation and needed them to prove it. For several months now we’ve been running a proof-of-concept processing real-world volumes of properties. The results we’ve seen from their insurability model combined with the recourse of the Aviva insurance is impressive and could result in increasing our ability to give mortgage customers instant valuation decisions.”
As lenders prepare for 2025, with continued gradual interest rate easing and a predicted resurgence of remortgage volumes, standing out from the crowded and competitive market will require strategic thinking and innovation. We believe that VerifyQ provides a clear advantage to those lenders wanting to get ahead of the pack, enabling them to improve customer experience, streamline operational costs, and differentiate themselves without compromising on risk or margin.
