Australia's mortgage sector has introduced e-commerce standards to accommodate the increased use of online loans requests which now account for 35 per cent of all applications.
This figure is set to increase to 70 percent by 2007, according to the not-for-profit e-commerce group Lending Industry XML Initiative (LIXI).
The group has been responsible for developing the Credit Application Language (CAL) to allow home loans to be transferred electronically which has halved processing costs.
Prior to CAL each lender had separate, non-compatible systems and mortgage application processing took an average of 13.4 days.
LIXI chairman Socrates Vasiliadis said brokers and lenders using CAL-compliant systems have reduced this time to seven days.
"In doing so they reduced processing cost from an average of $734 per application to just $213; as well as reducing data entry time and paperwork we have increased accuracy," he said.
"As we automate more of the lending chain, approval times continue to drop. This puts Australia ahead of the US and Canada."
Vasiliadis said LIXI research found that only 3 percent of the mortgage industry did not think e-commerce would affect their ability to trade while 65 per cent rated e-commerce as important to their business.
"Brokers who ignore e-commerce and the LIXI standard will lose business as customers simply won't wait the extra time for their loan to be approved or processed," Vasiliadis said.
CAL has already been updated to allow online data to be exchanged by solicitors, settlement agents, brokers, mortgage insurers and valuers.
"Applying for a mortgage is amazingly complex involving up to nine organizations. Much of the data required is still exchanged via fax and phone creating a high margin for error," he said.
LIXI estimates automation will reduce costs by more than an estimated $10 million per year.
Members of the group include Mortgage Choice, ING Bank, Westpac, Gadens and the Australian Finance Group.