The world spins a little quicker since the introduction of the internet. We buy and sell at the click of a button, we demand answers to our questions within minutes, rather than days, and we expect the same quality of products and standard of service as we had in the ‘old days’ – only faster.
As consumers become more web-savvy and open-minded about how they use the internet, so companies of all kinds have been able to take full advantage of this cost and time efficient means of doing business – and the UK mortgage market is no exception. It’s been a tentative process, thanks to the nature of financial services products, but, slowly, mortgage providers and advisers are awakening to the opportunities that the internet affords.
Educating consumers
The internet has become our greatest source of knowledge and, as a result, mortgage applicants are more clued-up now than ever before. Our own research shows that first-time buyers will spend more than 46 days deciding on a mortgage, while those who have recently remortgaged will spend 27 days. The web has become a key tool for educating consumers about the range of mortgages and remortgages available to them. Comparison websites have shaken up the mortgage market, putting pressure on lenders to provide new products, review their prices and increase their transparency.
This increase in consumer awareness has led to an increase in consumer choice, as mortgage hunters are now more knowledgeable about the kinds of product they want and how they want to be able to use them. Over the past few years, online mortgage centres have sprung up at a rate of knots – forcing lenders to introduce a number of new products and improved rates, as well as having to invest in their online systems and e-marketing to drive this new market of e-applicants to their sites. If these are ineffective, even larger lenders risk losing out and we could witness a battle of the brands.
Battle of the brands
If internet research is to take the place of browsing in the high-street, we could see a shift in where consumers and brokers place their business, based on how effective, user-friendly and transparent a lender’s e-shop is – both for consumers and advisers – so even those historically bigger brands are going to have to work to keep up. The internet could change the face of the mortgage market by creating a much more level playing field.
Standard Life Bank has recently taken several steps to up the ante. In January it launched Freestyle+ and in May, it introduced an online key facts illustration (KFI) and mortgage application service.
Accessible at www.freestylemortgages.com, Freestyle+ is a series of over 25 online movies presented by a roving reporter and a studio anchor. Users can pause, stop or rewind the films, or select a new one at the touch of a button. Movie topics range from basics including ‘How much can I borrow?’ to more in depth subjects such as ‘Offsetting vs Overpaying’. Although predominantly aimed at consumers, Freestyle+ can also be accessed at www.standardlifebank.com/adviser, where advisers can view a movie highlighting what we can offer them.
The new online application service allows KFIs to be obtained instantly, and applicants can choose to customise their mortgage to suit them – whether it be by adding flexible features such as a Freestyle cash reserve or adding the mortgage fees to the loan. Online affordability calculators can also help with the decision-making process. In most cases, once the application has been submitted, an immediate decision on the mortgage will be made. If the case is referred to Standard Life Bank’s mortgage underwriters, a decision will be provided within three working hours.
By offering online services such as these, lenders can support the advice process, rather than bypass it. They can help intermediaries to free up their time, allowing them to focus on building their business and strengthening client relationships. However, they will need to ensure that back-up support systems are available, especially when the system first comes into place. Standard Life Bank, for example, offers brokers and advisers the opportunity to pick up the phone to its underwriting department to track the case’s progress, if necessary.
Supporting and extending the intermediary role
Back in the days of paper applications, a broker met with a client, gathered his or her details and sent a packaged application to the lender – essentially handing over control of the case. Today however, the internet can help to support and extend the intermediary role. With decisions-in-principle (DIPs) now available online, brokers and advisers can get a case acceptance in minutes, rather than weeks. Online affordability calculators can also help to move the process on more quickly.
When it comes to submitting the application itself, the internet has made it possible to obtain a decision to lend, subject to valuation and confirmation of the information supplied. This means that the intermediary can then arrange the valuation without fear of spending the client’s hard-earned cash on a survey which may then need to be re-typed for a different lender if the application is not accepted. In this way, the internet supports and protects both the adviser and the ‘mortgagee’ from wasting unnecessary time and money – which can only improve their relationship.
But it doesn’t end at the mortgage application. Online case-tracking systems also enable intermediaries to monitor their clients’ cases, so they can keep them up-to-date with how their application is progressing, every step of the way. This extends the role of the broker or adviser, enabling him or her to provide added value and build a better client-relationship – something which in today’s regulated market place is invaluable.
Time is of the essence
In our time-poor society, speed of service is paramount. Our own research has shown that mortgage hunters currently spend an average of 4.4 hours just waiting for callbacks or e-mails from mortgage companies; which, for intermediaries, just isn’t an option.
Mortgage lenders are increasingly making their technology more user-friendly and efficient because the time saved submitting online applications vastly outweighs the time lost chasing, checking and waiting for lenders. Some lenders, including Standard Life Bank, will even pre-populate a new application online with the client’s previously submitted application. This is particularly useful where a client is purchasing a portfolio of properties – for example for buy-to-let purposes. And of course, the internet also provides flexibility because intermediaries no longer need be restricted by when they submit a case.
The internet has shaken up the UK mortgage market but in a way which has benefited consumers, lenders and intermediaries alike. The former can now enjoy a wider range of products and rates and take advantage of them more quickly then ever before.
Mortgage lenders, while being kept on their toes, are benefiting from a whole new audience and more cost-effective ways of reaching them. By exploiting the more efficient systems in place, mortgage intermediaries and financial advisers can spend more time understanding their clients’ wider financial needs and creating new business opportunities.
