Can Blockchain Help Mortgage Industry? We Take a Look… | Token Spoken
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Can Blockchain Help Mortgage Industry? We Take a Look…

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Currently, the global mortgage market is estimated to be worth around $31 trillion. Which is quite scary. America, England and China are the leading countries in the mortgage system. The mortgage is a very centralized system and the overall costs are huge. Currently, the interest rates vary between 2 and 5 percent. According to a report published by big four company PWC:

“Blockchain technology may radically alter the process through which consumers buy a home, as well as the way financial institutions handle mortgages. Specifically, the technology could remove cost and friction from the process, create transaction records that are infallible and incorruptible, and facilitate near-instantaneous settlement.”

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Barclays’s former boss Anthony Jenkins also said he believes time savings could be a very good factor, worth considering. He added:

“Over time what you could see, for example, is a mortgage being granted in 10 minutes, you could see a letter of credit being granted in two minutes, those types of things.”

DLT technology could help to remove the effects of middlemen, which is pretty important in this sector. Further, a report from Syncechron stated the savings could help to billions of dollars. They stated:

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“By automating and securing the mortgage lending processes, a blockchain-based system coordinates and identifies the agents and intermediaries and could reduce operational costs, fees, and fraud for financial institutions. We estimate savings of $177 million on a loan book of $97.7 billion for a typical mortgage lender.”

“Blockchain technology is expected to reduce total transaction time throughout the mortgage value chain by 25 percent, to 30 days from 40. If national governments establish a blockchain-based title registry, this is expected to fall a further 25 percent, to 20 days.”

For adoption, China is currently working for some use cases. According to BOCHK head Rocky Cheng Chung Ngam, these valuations needed to calculate monthly mortgage repayments:

“In the past, banks and [real estate] appraisers had to exchange faxes and emails to produce and deliver physical certificates. Now the process can be done on blockchain in seconds.”

Block66 is another startup that wants to use the technology to increase transparency, streamline the deployment of capital, and overcome geographical lending restrictions. The aim for them is to create a marketplace of pre-vetted borrowers which lenders can then access. According to Block66 CEO, Joe Markham, their platform is developing a new breed of mortgage lending platform:

“Our Blockchain platform will store government regulations, internal guidelines provided by lenders, and information on applicants and their property obtained directly from the source.”

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