A new report from the Intermediary Mortgage Lenders Association (IMLA) has found that a growing number of people in the UK are searching online to find a suitable mortgage broker.
The IMLA report – ‘The technological new frontier: digitisation in the mortgage market’ – suggests that as the Financial Conduct Authority (FCA) and mortgage lenders themselves support the further digitisation of the market, consumers will gradually find it quicker, cheaper and smoother to access mortgage finance.
An examination of Google Trends finds that more people are looking for a broker online while fewer consumers are searching directly for the best mortgage deal. In 2018, searches for “mortgage broker” – which now automatically highlight local mortgage brokers with a web presence at the top of any Google search – reached 14-year highs, increasing by 180% in five years (from a comparative search volume score of 22 in December 2013 to 62 in December 2018).
The growth in customers seeking information on mortgage brokers online has mirrored the growth of intermediary mortgage completions: over 70% of customers now source their loan through an intermediary when changing lenders.
The search findings complement research which suggests customers want a professional who can explain things. Three in five customers today would prefer to speak with an adviser about complex products, such as mortgages.
IMLA’s report suggests comparison websites have made limited inroads in the mortgage market, in contrast to other financial products such as car and home insurance.
It noted that the comparison websites only provide customers with a list of mortgage products from different lenders based on a very limited range of criteria such as LTV and borrower type. Also, there is no certainty that customers will qualify for the loans they have selected.
According to Amazon Alexa, more than half of all traffic to the top five UK price comparison websites comes through organic web searches. IMLA says the lack of inroads in the mortgage sector can be illustrated by the lack of mortgage-related terms which are driving that traffic. By examining the top 100 organic keyword search terms which lead to referrals for each of the websites, the lender body says it is clear that terms referring to both ‘cars’ and ‘insurance’ are significantly bigger drivers than ‘mortgage’ terms, which only account for around 10% of all organic traffic into the websites.
While 38% of brokers see the rise of robo-advice as the biggest threat to their business in the next three years, there are a number of barriers that stand in the way of firms seeking to implement a full robo-advice model.
IMLA says replicating the softer skills of a human broker, for example where the broker can appraise how well the customer understands the options on offer, will be difficult. IMLA’s own winter 2018 survey showed that 80% of members expect less than 5% of their mortgage business will be served by web-based robo-advisers by 2020.
The report notes that people’s lives frequently don’t fit into neat algorithms. Brokers often successfully challenge cases that are initially turned down by the lender for falling outside its criteria, and will know which lenders usually offer attractive product transfers at the end of an initial deal.
Kate Davies, executive director at IMLA, said: “We have already seen a number of digital advancements as the industry seeks out solutions to improve the mortgage and property transaction process. But we’re still some way from seeing a completely automated mortgage market as the technology cannot yet – and may never – fully address all customer needs.
“Our findings suggest that consumers clearly appreciate the softer skills offered by brokers. And online tools have made it easier for mortgage brokers to advertise their services and to be sought out by local property buyers seeking information and advice. The digital revolution hasn’t yet disrupted the traditional mortgage journey, but it’s certainly making it more effective.
“That’s not to say that change isn’t coming. Advancements in Artificial Intelligence and big data capture and manipulation are allowing more of the mortgage transaction process to be digitised. I’m sure we’ll see new and exciting developments in technology and delivery – and our members are very aware of the need to keep up to speed with what the market can provide and what consumers increasingly expect, so that they can stay ahead of the curve.
“Following the Mortgages Market Study, we have been working with the FCA to explore how improvements can be made to the way consumers find out about whether they are eligible for specific mortgage products. Constructing models which reflect the breadth of products and options across the market is very complex – and it’s clear that one size will not fit all situations. While we appreciate the FCA’s wish to enhance consumers’ experience, we think there is a risk that if it seeks to influence the direction of travel too strongly, it may actually inhibit the momentum which is naturally created in a competitive market.”