Bank transaction data insights provider MogoPlus has launched a ‘Mortgage Stress Predictor’, a predictive insights solution to help banks and borrowers manage rising interest rate pressure.
MogoPlus’ new solution uses predictive insights to gain an understanding of how a customer’s future ability to service their mortgage will be impacted by higher interest rates and the ongoing inflationary cost of living pressures.
It uses accurate income and expense behaviour data to deliver insights before a refinancing event happens. It also identifies potentially vulnerable customers earlier in the cycle. This enables the existing lender to engage in a proactive and responsible conversation with the borrower about their options.
The Reserve Bank of Australia estimated that around 800,000 fixed-rate mortgages representing loan liabilities of $500billion are due for refinancing in 2023.
The Mortgage Stress Predictor aims to reduce financial stress, vulnerability and hardship experienced by customers as a result of increasing mortgage interest rates and housing costs.
Mike Page, CEO of MogoPlus, explained what the solution aims to support. Page said: “When it comes to customer retention, one of the first things a lender needs to do is to understand each borrower better. Our Mortgage Stress Predictor enables a bank to get ahead of these issues, and take proactive measures to help that individual customer.
“At the peak of the pandemic housing boom, it was possible to get a fixed rate loan with an interest rate of 2 per cent per annum or less.
“As those loans mature, borrowers will need to navigate higher interest rates, the impact of LVRs on softer property values, and the monthly hip pocket impact of inflation on their cost of living. Those dynamics are already quite challenging and are still evolving.”
Keeping households ‘heads above water’
MogoPlus aims to enable enterprises to make fully informed customer decisions through descriptive and predictive data insights. The global fintech offers lenders a comprehensive suite of solutions tailored for specific credit products including home loans, credit cards, personal loans, buy now pay later, mortgage refinance, hardship assistance and business lending.
Sacha Close is the founder of Women in Credit Risk Australia and an expert in credit risk and collections. Close explains that the earlier a lender can get on top of any problems, the better the outcome: “Often customers don’t know when their loan interest rates will expire, and they cannot predict how increased mortgage rates and inflation costs will impact their budget.
“Many households are already facing financial stress. Keeping heads above water is the focus of many households. It is almost impossible for most customers to predict new repayments and this can catch them off-guard.
“As banking industry leaders, we are responsible for supporting our vulnerable customers in understanding the impacts as far in advance as possible, so they can begin to change their behaviours and plan. Modelling tools that use personal spending and saving patterns are critical to identifying not just vulnerable customers but all customers who could be shocked by significant changes to future repayments.”