Mark Dyason, managing director, Thistle Finance
Robo-advice is very much in that initial buzz phase. Homeowners are increasingly reading about it in the media, or are hearing about it through family and friends. In many cases, the impression they’ll get is that this is the next big thing, saving them money and making the whole process of taking out a mortgage much quicker and easier.
And it’s precisely this buzz that is the problem. There’s a risk amid all the excitement that people will forget that in turning to robo-advice they are turning down, or at least putting too little emphasis on, real-world advice and the value it provides.
This is where, for me, the potential for a mortgage advice gap arises.
To avoid any issues arising, and nip this in the bud, people should be required to declare that they are sufficiently financially knowledgeable to go it alone and understand the risk that turning down independent mortgage advice brings.
What particularly worries me is that, with the Bank of England increasingly hinting that the first interest rate rise for around a decade is on the cards, potentially as soon as November, people could be going it alone at precisely the time when advice can come into its own — and deliver real value.
After all, if we are soon to enter the beginning of the interest rate upcycle, people need to be more switched on than ever when choosing their mortgage.
Making a mistake in the benign rate environment we have been in for so long has meant you can get away with it, but the regulator’s increasing emphasis on stress tests show it is preparing for a significantly more volatile future based on rates heading north.
In short, is this really the environment to side-step the protections introduced by the MMR?
Make no mistake, technology will be ever more important within financial services, but it’s vital that the regulator does not allow a two-speed regulatory regime to emerge at precisely the time advice is more important than ever with rate rises on the horizon.
Martijn Van der Heijden, chief strategy officer, Habito
There is no gap in the advice that customers get with a digital mortgage. Actually, we think the gap lies more with traditional brokers! I’ll explain…
When we say ‘digital mortgages’ we mean using the best of technology and always-on digital channels such as websites or apps, to give personalised advice via mobile, iPad or laptop. Put like that, I’m sure you’ll agree that it’s hard to be against this.
First, the advice in digital mortgages is just as good as that of traditional brokers when done right. MCOB (Mortgage Conduct of Business) is a complex world, there is a dizzying amount of products and every customer has their own preferences and needs – so any advice needs to solve a very complex puzzle.
Computers can solve puzzles very well…that’s what they’re for. In fact, while no doubt there are some human super-brokers who can scan the whole market, every new product, every eligibility change, every single time…would you want to bet who gets it right most times? At Habito, our algorithm scans over 70 lenders and over 20,000 product configurations. And because neither the computer nor our mortgage experts are paid commission, we are totally unbiased in our product recommendations.
Second, being digital gets mortgage advice to people who otherwise would not even try to buy a house or remortgage. Millions of UK homeowners feel, to say the least, under-motivated to remortgage, because the process was so painful the last time around. Offering free, impartial advice on evenings and weekends via an online live chat with an expert, makes getting advice on your mortgage far less daunting.
Many consumers fear being judged or rejected outright on their spending habits, debts or income. It is human nature that face-to-face confrontation makes us feel uncomfortable, but being able to have a chat from behind a screen lowers that fear enough that many people now feel comfortable in seeking mortgage advice.
So, if it’s done right, digital mortgages are about giving all customers consistent quality advice on their terms. That’s not a gap, it is progress.