Episode 254: Disruption Stories - Transforming Mortgage Lending

The mortgage industry has long been regarded as traditional and slow-moving, but the rapid growth of financial technology (FinTech) is driving significant change. In the latest episode of Breaking Banks Europe, host Don Ginsel is joined by Geert Van Kerckhoven , CEO and Co-Founder of Oper Credits , a leading tech company at the forefront of revolutionizing mortgage lending. Their conversation delves into the various ways technology and regulatory changes are reshaping how people acquire mortgages, the challenges of affordability, and the opportunities emerging in the digital mortgage space.

The Changing Landscape of Mortgage Lending

For years, obtaining a mortgage has been an extensive and often opaque process, with borrowers typically reliant on the traditional banking system, which could involve lengthy paperwork, manual evaluations, and in-person meetings. Geert Van Kerckhoven discusses how Oper is making significant strides in streamlining this process through technology, particularly in automating property valuations and loan approvals.

At the core of Oper’s approach is the digitization of mortgages. Geert explains how new technologies, such as artificial intelligence (AI) and machine learning, are enabling faster and more efficient underwriting and property assessments. These advancements not only improve operational efficiency but also provide clearer insights into mortgage affordability for borrowers. With the increasing demand for more transparent and accessible mortgage processes, the company is working on innovations that make the home buying process faster, more personalized, and fully digital.

Technological Innovation in the Mortgage Sector

One of the key themes in their conversation is the role of digital transformation in mortgage lending. Geert highlights that as traditional methods like physical property evaluations and paper-based applications become outdated, there is an enormous opportunity for FinTech companies to step in and digitize these processes. Through AI and automated systems, Oper can provide real-time property evaluations and risk assessments that allow borrowers to receive approval for mortgages quickly and efficiently.

The company’s work is a significant advancement in a market that has often been criticized for being cumbersome and slow. The process of applying for a mortgage can take weeks or even months in traditional settings, but with digital innovations, that timeline can be drastically reduced. This is particularly important as the cost of housing continues to rise across Europe, making the mortgage approval process even more critical to prospective buyers.

Regulatory Challenges and Opportunities

As with all industries undergoing rapid transformation, the mortgage sector is also heavily influenced by regulatory frameworks. The conversation touches on the complex relationship between regulatory bodies and mortgage technology companies. For instance, Geert explains how regulators sometimes push back against digital mortgage solutions, particularly in the areas of property valuations and automated underwriting. While regulators in some countries, such as Hungary, have embraced digital solutions with great speed and enthusiasm, other regions are still focused on ensuring that the traditional approaches remain in place.

One of the significant regulatory developments mentioned is the Digital Operational Resilience Act (DORA), a framework that aims to ensure financial institutions’ operational resilience in the face of increasing digital threats. Geert acknowledges that these regulations present challenges but also sees them as opportunities for companies like Oper to refine and enhance their technological offerings. The key is to embrace regulatory changes while ensuring that digital solutions are aligned with compliance requirements.

Geert notes that DORA, along with the AI Act and other regulations in Europe, forces financial institutions to rethink their approaches to technology. However, he emphasizes that these regulations can also serve as levers for innovation, provided companies adopt a proactive mindset. He also mentions the role of responsible AI in the mortgage lending process, particularly in automating decision-making processes such as property valuations and risk assessments.

The Importance of Affordability and Housing Access

The discussion also delves into the broader macroeconomic implications of mortgage lending. One of the challenges identified is housing affordability, particularly in high-demand markets where rising house prices are outpacing wage growth. Geert reflects on how mortgage lending practices, such as offering higher loan-to-value ratios, have played a role in inflating property prices. He points to the Netherlands, where the trend from single to dual-income households has become the norm for affording a house, a factor that has driven housing prices even higher.

With housing affordability becoming an increasing concern, especially for younger families, Geert sees a role for FinTech in providing more innovative mortgage products that make homeownership more accessible. He predicts that mortgage products will need to evolve significantly to address affordability challenges, with new structures that cater to diverse buyer needs, such as fractional ownership and rent-to-buy schemes.

As governments and regulators continue to push for more energy-efficient homes through green deals, homebuyers are faced with additional financial pressures. Geert stresses that these new requirements for energy efficiency in homes are pushing up property prices, further making it difficult for families to buy homes. The dilemma, as he points out, is how to balance environmental sustainability with housing affordability—a challenge that will become increasingly important in the coming years.

The Future of Mortgage Lending: New Products and Opportunities

Looking ahead, Geert shares his long-term vision for Oper and the mortgage industry as a whole. With the rise of automation, machine learning, and AI, the traditional mortgage market is poised for even more disruption. He points out the need for innovative products that help make homeownership more accessible, especially for younger generations who are facing mounting challenges when it comes to purchasing property.

Among the exciting possibilities on the horizon are new forms of financing, such as fractional ownership and equity-based financing models, which could provide alternatives to traditional mortgage loans. Geert sees these innovations as part of the future landscape of property ownership, where more flexible and personalized financing options will emerge to meet the needs of a more diverse and financially stretched population.

Additionally, the concept of reverse mortgages—particularly for retirees looking to unlock the value of their homes—is gaining traction in several European countries, including the UK and France. Geert suggests that reverse mortgages could become a default product in an aging society, helping seniors maintain financial liquidity during retirement.

Financial Education and Empowering Consumers

As Oper continues to innovate in the mortgage space, Geert emphasizes the importance of financial education for consumers. He notes that one of the greatest challenges in the mortgage industry today is ensuring that borrowers are equipped with the knowledge and resources to make informed decisions. With many new and complex products emerging, financial literacy will be key to helping consumers navigate the evolving mortgage market.

The ability to understand digital mortgage products and how they align with personal financial goals will be crucial for future homebuyers. Geert envisions a future where consumers have the tools and guidance they need to make better financial decisions, whether it’s purchasing a home, refinancing, or investing in property for the long term.

The disruption of the mortgage market is well underway, driven by advancements in technology and changing consumer expectations. Geert Van Kerckhoven and Oper are playing a pivotal role in shaping this transformation, offering digital solutions that make mortgage lending faster, more transparent, and more accessible to a wider range of consumers.

The future of mortgage lending will be defined by innovation, regulatory evolution, and the need for more inclusive and affordable products. With digital tools, AI, and automation, the mortgage industry has the potential to become more efficient and equitable, helping more people realize their dream of homeownership.

As the landscape continues to evolve, it is clear that the mortgage sector will need to embrace change and think beyond traditional models. By leveraging technology and focusing on the needs of the customer, companies like Oper are at the forefront of this exciting transformation.

?? Watch the full episode here: https://youtu.be/1vaYdRYySZc

Geert Van Kerckhoven's LinkedIn: Geert Van Kerckhoven on LinkedIn

Oper's Website: www.oper.com