Posted inOpinion

Fintech revolutionises the mortgage landscape in the UAE

Fintech and digital platforms are making mortgages more accessible and efficient, making it easier for home-buyers to secure their dream abode

Fintech revolutionises the mortgage landscape in the UAE

Around the world, owning a home remains a major personal investment milestone. It is therefore no surprise that through periods of volatility and change, real estate has grown to be the world’s largest asset class valued at over $613 trillion. The high-value nature of the property industry means that it is not just a driver of wealth, but also has a major economic impact, supporting various sectors and enabling job creation. Today, real estate contributes 5.5 per cent to the UAE’s GDP and this number rises to 8.9 per cent when we look specifically at Dubai.

In the heart of the Middle East, the UAE is recognised as a beacon of progress and innovation. This is particularly evident in the realm of home finance, where technology has catalysed a significant shift away from traditional practices. Today, digital platforms are transforming the landscape, making financial services and mortgages more efficient and accessible than ever before.

In 2023, there was a 40 per cent increase in the value of home mortgage approvals, despite rates growing to over five per cent. The high yields in the UAE and ever-increasing rental costs continue to make homeownership a very viable investment option.

Reimagining the home buying journey

One of the biggest barriers to homeownership has been access to finance. Historically, home finance in Dubai was a domain managed directly by conventional banks. However, the advent of the digital age has disrupted this status quo. Today, we see an increasing prevalence of fintech companies offering innovative solutions for home financing. These digital platforms have democratised access to financial services, making it easier for consumers to navigate the often-complex world of home finance.

The typical home-buying journey has customers spending weeks looking for a home and dealing with various stakeholders in the process. But once they find their dream home, after spending a significant amount of time searching for a property, prospective owners may face the disappointment of not securing a mortgage.

Home buyers looking for financing traditionally have not had it easy. Finding a mortgage meant dealing with multiple banks to find the best rates, securing discounts and offers, and navigating through large amounts of paperwork.

As a mortgage professional, one of my key pieces of advice to clients is to secure their mortgage pre-approval, as soon as they start their home search. This ensures that they have the financing in place, once they find the home they wish to purchase—and this can be done online.

Building trust and security

Home-buying apps and websites have been around in the region for some years now. However, most of these have focused on property listings and classifieds only. Technology as such, hadn’t penetrated the financing part of the home-buying journey with mortgages being largely offline. A major reason for this was due to concerns around trust, privacy, and security.

Advancements in technology nowadays have enabled start-ups to address not only the issues faced by property buyers but also the concerns of all stakeholders in the home-buying ecosystem.

Daniel Le Moeligou, Head of Channel, Direct Sales, Huspy

Customers can now easily browse mortgage rates and options from multiple banks without the need to visit branches. Home financing platforms provide a convenient one-stop shop for buyers and mortgage brokers to compare rates with just a click. The best part is that all this is free of charge, with no cost for cost analysis and applications for home buyers.

The mortgage sector is being revolutionised by technology, allowing banks to make quicker lending decisions by accessing credit score databases and verifying a client’s financial history. Banks now accept digital documents, significantly reducing processing times for mortgage applications. This digital transformation is streamlining the lending process and making it more efficient for both banks and clients.

For mortgage brokers and banks, technology has transformed their way of working. This includes streamlined application processes, clear and transparent client communication, and a layer of security to protect all customer documents. In the region, we’ve seen how customer applications and confidential material are often shared over messenger apps. With technology, such privileged information is received and stored securely, and access is provided only to those who require it.

Enabling access to the best rates and exclusive offers

Advancements in technology are enabling potential borrowers to access a broader spectrum of available interest rates in the market, prompting banks to maintain competitiveness. For instance, in the UAE, we’ve observed a decrease in interest rates to 3.89 per cent for a two-year fixed term. Alongside, applicants are being offered incentives such as zero per cent processing fees and zero per cent valuation fees. This trend is primarily fuelled by smaller banks benefiting from technology giving them greater market visibility.

Technology will evolve mortgage products for customers

The home finance sector in the region is set for transformation, with artificial intelligence and blockchain technology expected to play a key role in ensuring secure and transparent transactions. By leveraging technology, banks and mortgage brokers can offer customised financial solutions to meet the specific needs of customers. We anticipate a seamless integration of client interaction with applications, simplifying processes from mortgage processing to property acquisition for a truly digitised experience with minimal friction.