Guildford-based mortgage fintech MQube has become the first lender in Europe to tokenise mortgage debt on the blockchain, with £1.3 billion of loans now recorded via an Ethereum-compatible chain.

The move sees MPowered Mortgages, MQube’s lending arm and operator of the One Day Mortgage, bring its mortgage assets on-chain — a development the firm believes could mark a turning point for the mortgage and wider financial services industries.

Tokenisation converts tangible or intangible assets such as property into digital tokens stored on a secure, decentralised blockchain ledger. The process allows for immutable record-keeping and the potential for faster, more transparent asset transfers.

While other asset classes such as equities, bonds and real estate have previously been tokenised, this marks the first instance of mortgage debt being brought on-chain in Europe.

Stuart Cheetham, chief executive of MQube, said: “The benefits of tokenising mortgage debt right now is that it allows mortgage lenders to achieve data integrity, transaction security and audit traceability.

“But once the necessary regulatory and operational framework is in place – and there is still a huge amount of work to be done here – the opportunity for the mortgage lending industry is huge.”

He added that tokenisation could dramatically simplify remortgage transactions. “The ability to transfer assets from one lender to another cuts out legal process in a remortgage case and saves thousands of pounds per remortgage transaction.

“Most importantly, however, the tokenisation of mortgage debt paves the way for a brand-new mortgage securitisation market via the blockchain which involves the pooling of mortgage debt into a tradable and investable mortgage security.”

The securitisation of mortgage debt is designed to free up capital tied in existing loans, enabling banks and non-bank lenders to increase liquidity and expand lending capacity. For borrowers, it could ultimately mean lower costs and greater product choice.

Cheetham said: “This is a remarkable development for our industry and we are proud to be at the forefront of this monumental shift.

“As a fintech business, we set out to reinvent the mortgage industry and now not only are we delivering one day mortgages but we are seriously addressing how we can use the cutting edge of blockchain technology to transform the entire banking ecosystem.”