The digital settlement service is expected to create greater certainty around settlement times, more transparency and faster turnaround times.
Property Exchange Australia (PEXA) surveyed its existing users and found that 20 per cent of settlements do not occur when promised.
“When we survey a customer, that is their number one gripe,” PEXA chief executive Marcus Price said. “That and lack of transparency,” he said.
“Both of those will be fixed by PEXA. There will not be failures in settlement dates. We pre-check all the documents for lodgement way before we get the settlement time, so the likelihood of failure will drop dramatically.
“Where brokers will really benefit is they will get certainty and transparency in terms of settlement times,” he said. “That will affect the customer.”
PEXA-enabled electronic settlements are changing the nature of mortgage competition as lenders work together to join the digital platform.
All four major banks are now transacting on the e-conveyancing system.
Non-majors BankWest, Suncorp, Teachers Mutual, Bankmecu and Beyond Bank are also using the service, which provides a completely electronic end-to-end settlement service for property transactions.
“In a digital sense you will basically sign your loan agreement and contract of sale, but beyond that, everything else will be handled electronically,” PEXA chief executive Marcus Price told Mortgage Business.
“We launch the NSW full functionality with financial settlements and transfers next month,” Mr Price said.
PEXA will be rolled out across Victoria in December, with WA and Queensland to follow in the first quarter of next year.
“By April/May next year we will have the four major states on for full functionality so we really will be industrial strength at that point,” Mr Price said.
Patti Eyers, chief executive of mortgage processing firm First Mortgage Services, said being part of a group that operates in 60 countries made her realise that Australia was “quite far behind” in terms of automating the settlement process.
However, Ms Eyers said the PEXA would make Australia “far advanced” than other countries because it would leapfrog their level of automation.
“But what you’ll find in some of those jurisdictions is electronic documents are exchanged but the dispersement of funds is still a manual one,” she said.
“Australia will surpass that once the platform is at its full capability.”
Ms Eyers said brokers would benefit because the system would be more efficient and transparent, leading to better customer outcomes.
Also in November, PEXA goes live with its Reserve Bank settlement solution.
“The RBA have done enormous work on this; Glenn Stevens in particular sponsored it, and we are really pleased with his support and the support of the Reserve Bank generally,” Mr Price said.
PEXA will soon be able to transfer cleared funds from an Exchange Settlement Account (ESA).
“What that means is that people will get their money straightaway – within minutes,” he said. “That will change customer expectations.
“We lodge the documents at the land registry, send a signal to the Reserve Bank, the Reserve Bank releases the transfer between the major banks, and those monies are available in real time.”
NSW brokers can expect faster turnaround times as a result, Mr Price said.
The initiative will be rolled out slowly to give users time to adapt to the changes, he said.
“We don’t see this as being a short-term thing. We are taking a low-risk approach to the rollout as we want to ensure everything goes through smoothly.”