Should brokers be worried about the rise of digital mortgages?
It might be easy to think that brokers have never been better, with record loan origins and market share. But are digital mortgages about to steal some of that volume?
Commonwealth Bank recently announced that it plans to launch its own digital mortgage product, with the promise of approvals in just ten minutes.
Digital mortgages could be seen as a disruptor to the traditional first party / third party separation, as they allow direct B2C approval by lenders to clients.
They already represent a significant share of the mortgage market in the United States and are expanding in Australia, with an 86,400 lender pioneering their use and a new lender Nano making $ 100 million in digital home loans approved in just one month of operation. .
“I think this reinforces the opinion that we have had for a number of years,” said Andrew Walker, CEO of Nano.
“The inevitable shift to digital origination will accelerate. The fact that CBA has finally picked up on this trend and is following it is a great strengthening of our business. ”
The question, however, is whether brokers should be scared as digital mortgages, which could be seen as removing the middleman position currently occupied by brokers and allowing clients to get direct lender loans for them- same.
“My point of view is always to take a step back and ask: what service do you offer? And what remuneration do you charge for this service? Walker said.
“If you really provide great service, you will continue to get paid and have a place in any market. As a higher-order principle, it’s hard to see how this won’t always be true. ”
“With technological and digital disruption across the world, this logic can be a challenge. It is inevitable that digital mortgages will become a big part of the market just as they are in the world.
“Now will they be able to capture all the circumstances of the customers and will all the customers want to go through the digital channel? Of course, in the medium term, the answer is no.
“There will always be people struggling with complex financial situations that will require the expertise offered by the broker channel, and I don’t see that changing on the horizon.
“Should brokers be worried? There is no doubt that digital mortgages will eat away some of the brokers’ market share, just as they will take some of the first part. ”
“If I were a broker, I wouldn’t be worried about digital mortgages, I would be looking to think about how I might adopt new technologies to improve my business. ”
Nano has a digital mortgage product in the works, but a lender is already offering digital mortgages directly to the broker channel.
86,400 was one of the first to bring digital mortgages to the broker channel and recently signed deals with Plan, Choice, and FAST to secure digital home loans from leading aggregators.
George Srbinovski, Head of Broker Distribution, explained that digital mortgages could be highly compatible with the broker channel and indeed could help brokers underwrite more business through streamlined loan approval processes and accelerated.
“86,400 has always supported brokers,” he said. “We were the first digital real estate loan for brokers and we continue to support the chain. We’re sure there will be more announcements similar to what we’ve had recently with FAST and other aggregators.
“We also have an 85% LVR product, without LMI, which further shows our support for the broker. Our digital home loan is a process, and that’s what digital is. It does not remove human interaction, it does not remove anything: it improves the interaction that the broker has with his client.
“From day one, being the fastest proposition to yes is what digital is, and trying to improve speed and efficiency, and enable brokers to deliver an exceptional level of customer service to their clients.”
Read more: ABC’s new digital mortgage product could be on the verge of extinction