Commonwealth Bank of Australia (ASX: CBA) customers could soon be able to secure a mortgage in a matter of minutes.
CBA's share price is sliding, down 1.23% in morning trade as the bank revealed plans to launch fully digital home loans on Friday.
Image source: Getty Images
Why is CommBank going into the digital mortgage space?
CBA's share price, longer term, could be impacted by the range of emerging fintech companies nibbling away at the edges of its lucrative mortgage market.
Certainly, Australia's biggest bank has recognised the potential threat to its home loans business. The CBA currently holds some 25% of Australia's home loans.
As the Sydney Morning Herald reports, CommBank's retail banking services group executive Angus Sullivan revealed on Friday the bank is going head-to-head with fintechs in the digital mortgage space.
Unloan, CBA's digital mortgage system, will, in part, use data from the open banking system to facilitate fast approvals.
According to Sullivan:
We'll be looking to do a 10 to 20 minute mortgage, and that will be a huge opportunity for more Australians to take advantage of locking in great rates by refinancing more easily…
That will be a very revolutionary product when we fully get it live in market.
Sullivan added that the rapid loan option would initially apply to loans below $3 million with lower loan-to-valuation ratios. "Mortgages with higher values, or more complicated loans such as those involving trusts, would be harder to automate," he said.
What about the pandemic lockdowns?
Sullivan remained optimistic about the outlook for the home mortgage market. Despite much of the eastern seaboard still under lockdown in the ongoing battle against COVID-19, he said the current low interest rate environment was spurring confidence.
According to Sullivan (quoted in the SMH), "I think despite the current dynamic, we're seeing a relatively persistent level of interest in the housing market."
CBA share price snapshot
CBA's share price has gained 46% over the past 12 months, compared to a gain of around 25% on the S&P/ASX 200 Index (ASX: XJO) over that same time.
Over the past month, the CBA share price has gained 5%.
