Blockchain development technology is emerging as an important part of every major industry. Be it oil and gas, education, healthcare, finance, mortgage or other – blockchain is establishing itself prominently in every field. Ever since its arrival blockchain has made a mark. It has grabbed a lot of attention from the people of different industry. Most of the blockchain development companies have shed limelight on its potential to bring the transformation in the industries. Blockchain has several salient features which make it a top priority of the people from different industries, including mortgage industry.
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Recap of Blockchain Development Technology
Blockchain development technology utilizes a distributed computer network platform that enables databases to store time-stamped transaction records and documents. Each server in the network processes and verifies each data entry, then archives all transactions, along with the history trail, which is every transaction ever recorded to the network.
Blockchain development technology has introduced the new monetary exchange in the form of cryptocurrencies. Well as compared to the conventional payment method via credit cards, wire transfers, and other cryptocurrencies like Bitcoin provides quicker and less expensive ways to accept the payment by the customers. These transactions that are occurring provides more power to the retailers as compared to the consumers.
Current Scenario of Mortgage Industry
When blockchain technology came into the market, people use to link it with bitcoin and cryptocurrencies. Now, over the years its role has completely changed. Blockchain has brought a revolution in most of all industries. In the past few years, a large number of companies are opting for the blockchain technology to bring innovation in their business and also for decentralization.
The market size of global mortgage industry soon will be approx. $31 trillion. It’s huge! In countries like, America, the mortgage is present in around 66% of the houses. Similarly, for countries such as China and the UK, it is even more than 70%. According to the PWC report, the cost of the mortgage is around the 2 and 5 percent of the price of the property which includes the fees of the broker, the fees of the loan origination, underwriting fees, surveyor fees, legal fees, and title fees.
Hence, for example, if the cost of a house is $250000 for the mortgage it will cost between $5000- $12500.
Blockchain As A Savior in Mortgage Industry
There are middlemen involved in case of mortgage transactions. Hence, the cost for the mortgage increases as they too put their own charges thereby increasing the overall cost of the procedure. Thus, it is being predicted that blockchain will open many doors for the industry. And, with the help of blockchain, the annual saving will be more than $1.7 billion for the industry. The mortgage procedure is quite complex and blockchain has the key to solve it all.
There are several advantages of using Blockchain in mortgage industry, as mentioned below:
No processing fees
Whenever we go for a digital payment, it charges some processing fee. This occurs due to the presence of an intermediary that is present for the regulation of the payment and takes the charge. Well, this can be avoided in the case of cryptocurrencies as there is no intermediary. It is decentralized so there is no charge for the transactions. Thus, it helps in saving unnecessary expenditures and transaction fees.
The payment speed is quite fast for cryptocurrencies. As for the Bitcoin, it takes 10 minutes maximum for the completion of the payment. There are also other cryptocurrencies like Ethereum and Litecoin which verify the transaction in just 20 seconds. Thus, the currency will take no longer than 20 seconds to get deposited into the accounts. These transactions are much faster than credit cards which takes 2-3 days to clear. This will ultimately increase up or boost up the process of a mortgage application.
No intermediates involved
With the use of blockchain, there is no third-party involvement. Hence, blockchain acts as a trust keeper here. Also, adoption of blockchain leads to reduction in overhead costs. A lot of start-ups have also come up which are using the blockchain to streamline the mortgage application process.
- Moneycatcha is one of those start-ups which uses the blockchain so as to make the applications regarding the loan cheaper and faster as well.
- HomeGain is an end-to-end blockchain solution that retrieves and verifies the given data quite fast and also with security from third-party data providers that includes the government agencies and the land offices.
- Another blockchain-based platform in mortgage industry, Regchain, monitors real-time loan applications.
Parting thoughts: Blockchain and Mortgage to walk hand-in-hand
Thus, the blockchain has shown a lot of potential for the mortgage industry. It offers numerous benefits. Definitely, in the near future, it will be much more widely accepted in the industry. Blockchain comes with several perks which can change the entire landscape of the mortgage industry.