Whether it be house prices, rising interest rates, or product withdrawals, the mortgage market has been front and centre of national news coverage in recent months.
While switching on the TV, grabbing a newspaper or going online were once the only ways to get your news fix, we are seeing the younger generation in particular turn to social media platforms like TikTok for quick and easy access to information.
TikTok’s reach also extends to the mortgage market, with advisers increasingly using the platform to break down complex mortgage-related issues into snappy, digestible, short videos for prospective clients.
From explaining concepts like second-charge mortgages and debt consolidation loans, to ways to boost your credit score, advisers are cutting through the jargon to offer educational content without crossing the line into advice.
The launch of Skipton’s 100% LTV mortgage in May showcased the power of social media. Within just a few hours, advisers’ TikTok accounts came to life with the news, with feeds awash with details of the launch as the news unfolded.
From their desks, cars, and even walking down the street, brokerages across the UK caught the attention of younger audiences and the target market for the new product – first-time buyers (FTBs). There was certainly a buzz around the launch, particularly amongst Gen Z and Millennials, with advisersharnessing the power of social media to propel this further.
There was a similar effect on Twitter, Instagram and Facebook, with practices keeping potential clients up-to-date, engaged and informed – often building thousands of followers in the process.
TikTok is a great way to reach a younger audience plus elements of an older demographic who use it regularly. As users look to understand what is happening in the current market, a brand presence on social media can help build trust and credibility with prospective clients.
While some of the recent upheaval in the mortgage market has understandably been a cause of frustration, what it has done is reaffirm the adviser/client relationship; with clients for guidance – whether formally or through social media.
The recent rise in mortgage rates and general uncertainty surrounding what is happening in the financial markets has seen a growing demand from borrowers to stay informed and be in the know. Social media offers a way for advisers and borrowers to connect and interact, and we expect this trend to continue.
In 2022, 84% of mortgage business was conducted through mortgage intermediaries according to the Intermediary Mortgage Lenders Association (IMLA), with the trade body predicting this could be as high as 90% next year.
For a lot of the younger generation, TikTok and other forms of social media might act as their first initial connection with an advisory firm and if advisory market share is to be maintained, this is a trend we cannot ignore.
Meeting expectations
As we see the increasing use of social media to initially connect with clients, we need to ensure the expectations of a more digitalised generation are met by the mortgage process itself. Although the digital journey is further ahead with some lenders than others we are starting to see some exciting innovations through the implementation of Open Banking.
Leeds Building Society, for example, recently announced it would start to factor subscriptions to digital entertainment services such as Netflix and Spotify into a borrower’s credit score, by using Open Banking to link their current account payments to their score calculation. In preliminary tests, the Society said 7.5% of applicants saw an improvement in their credit score by incorporating such payments.
Last year we launched our own Evolution Money app, which also incorporates Open Banking and we too found this approach worked to the advantage of applicants. Open Banking allows us to delve into a borrower’s current spending habits as well as their past, offering a much more comprehensive assessment of their affordability and for some clients, potentially allowing them to borrow more.
As homeowners continue to spend on credit cards and take out personal loans to cover the increasing cost of living, we continue to see an elevated demand for debt consolidation second-charge mortgages. We expect this to be one of the main growth areas for second-charges moving forward. For such clients, looking at more than the headline figure from their credit score can be crucial.
As the TikTok generation seeks new ways to engage with advisers and lenders, it’s crucial to reciprocate by meeting their technological expectations throughout the mortgage and second-charge journey.
Matt Meecham is chief digital officer at Evolution Money
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