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How blockchain could transform UK homebuying and make Lloyds a big winner Proactive uses images sourced from Shutterstock <\/p>\n How blockchain could transform UK homebuying and make Lloyds a big winner Proactive uses images sourced from Shutterstock <\/p>\n
Buying a house in the UK is, by international standards, a miserable experience.<\/p>\n
From offer accepted to keys in hand takes an average of 120 days, and one in three sales falls apart before completion. In Australia the same process takes five weeks. In the US, five weeks.<\/p>\n
In Germany, seven. RBC Capital Markets reckons this is about to change, and that the banks best placed to drive that change stand to make significantly more money from their mortgage books as a result.<\/p>\n
The technology at the centre of this thesis is mortgage tokenisation, which sounds complex but the principle is straightforward.<\/p>\n
Instead of a property transaction involving a chain of solicitors, brokers and administrators passing paper and money between each other over four months, the loan and the property title are converted into a digital record on a blockchain. Payment is released automatically the moment the title transfers.<\/p>\n
The process becomes instant, secure and far cheaper.<\/p>\n
RBC estimates this is less than three years away from being a commercial reality. The prize is substantial.<\/p>\n
At present, a typical home purchase comes with around \u00a34,000 in costs for the buyer, covering solicitors, searches, surveys and mortgage arrangement. A remortgage costs around \u00a32,000.<\/p>\n
Tokenisation would cut conveyancing fees in half and, in RBC’s view, make mortgage brokers largely redundant, since the same AI tools that banks already use to understand their customers’ finances could match them to the right mortgage product directly.<\/p>\n
If banks share those efficiencies equally with customers, RBC calculates that the average person will save around \u00a38,000 over a lifetime of property transactions.<\/p>\n
Banks, in return, would be able to charge slightly higher mortgage rates to customers who value the certainty of a faster, more reliable process, in the same way that chain-free properties already attract a premium on the open market.<\/p>\n
The aggregate benefit to the sector is put at \u00a31.7 billion a year, split equally between banks and their customers.<\/p>\n