Real estate credit

A possible recovery in real estate credit?

The property market is indeed showing signs of improvement compared with at the start of the health crisis, with a marked increase in the number of loans granted.

This recovery is due to four major factors:

1. The ECB’s rather accommodative policy in an environment where rates are low on the whole.
2. The further cut in real estate credit rates which were at 1.06% in the second quarter of 2021.
3. The rise in the usury rate, thereby allowing more risky profiles to be financed.
4. Relaxing of the recommendations of the High Council for Financial Stability (HCSF) on the debt ratio, making it possible to increase the amount borrowed by 10% compared with last year.

Banks therefore want to win new customers and are lending to a wider target population: lower income, profiles less desired in previous years, projects other than the purchase of a main residence.

To take advantage of this recovery, market participants must show their agility and upgradeability:

In their onboarding processes

Customers must be able to prepare their applications beforehand, and have access to extensive possibilities in terms of online simulations, display of information, exchange of documents etc.

The lead times between applying for and obtaining funds must be as short as possible, and the associated commitments must be respected.

Customers must be able to receive as much information and as many real-time notifications as possible to track their credit application and the release of the funds step by step.

In their management processes

It is essential to modernise the management IS, to successfully implement the digital transformation process.

The profession is often still equipped with solutions based on incompatible architectures which hinder the required development or make it impossible. Indeed, over the years, different layers of programs have been added, leaving monolithic legacy systems that are difficult to upgrade.

Without compromising their business value, extensive functions and security, management information systems must now provide the basis for a new user experience, in particular by being more open to outside players:

• IS of guarantors and insurance companies.
• Other intermediaries, traditional or fintech financial partners and brokers.

Furthermore, open banking, which opens up further areas for cooperation, requires them to comply with new open standards.

In addition; they must offer industrialised and secure management of the different events in the life of a loan.

At the same time, banks are obliged to reduce their management costs, which are still very high for real estate credit, and are looking for greater operational efficiency.

 

Xloan is the leading software package in France for real estate credit

Xloan can provide all the processes of a real estate credit business, from distribution to production, or only the processes linked to production and management.

In the latter case, Xloan acts as a credit engine which communicates with the establishment’s IS and distribution portals.

Regarding distribution, Xloan supports all sales channels: Outlets, online subscription, agencies, partners with a smooth and expert customer journey:

• Onboarding and customer experience: RPA, chatbots, selfcare, online simulations
• Automatic or contextualised scoring and risk analysis processes
• Expert, agile and smart loan engineering to set up the files: measuring of borrowing capacity, adaptation of monthly payments due, assessment of contributions, wrap-around mortgage loans, calculation of capital structure optimisation
• Exhaustive and flexible KYC
• Electronic signature

Regarding production and management, Xloan is suited to all types of credit in force in the real estate credit market in France:

• Unregulated/regulated
• Fixed/index-linked/revisable
• Grace period/Graduated/Smoothing
• Combined/Repayment target
• Immediate repayment
• Interest on capital borrowed
• Commitment fee
• Interest-only/back-to-back
• Syndicated/Jointly owned property/Construction
• Interest-free loan.

Xloan makes it possible to meet the reinforced transparency requirements* of the new European regulations.

*The new legislation requires very responsible lending by lenders and intermediaries.

Xloan makes it possible to give an account of all of the actions carried out for a real estate loan granted to a customer throughout the cycle, and to produce standardised and personalised information:

• Supply of complete audit trails
• Real-time information
• Time stamping of management events

Xloan is suitable both for small establishments and for institutions processing very large volumes by taking into account the following issues:

• Ease of use
• Configuration accessible to businesses
• Scalability
• Suitable economic models
• Proven interoperability, the latest APIs
• Cloud – private SaaS
• Modularity/Components:
  • Ability to cover the whole life cycle of a credit transaction,
  • Ability to specialise in a few central functions of the legacy system