It’s still early days but the mortgage industry is in a state of radical and irreversible change. The change is going to be root-and-branch and what emerges will, in many respects, be unrecognisable from what we know today.
In this brave new world, there will be unrivalled opportunities. Yes, we are about to witness the transformation of an entire industry but for brokers – whose role will become more advisory – it will be the chance to embed themselves in the day-to-day fabric of their clients’ lives.
Automation will be at the heart of the coming revolution. The environment it will unfold in will be open banking, where everything is interconnected and even sensitive information can be effortlessly (and securely) shared.
As an event, applications will pale into insignificance because so much about everyone — income, affordability, LTV, mortgage balance and credit score — will already be known.
Borrowers will effectively be permanently applying for and switching mortgages via the ever-changing minutiae of their everyday financial and economic lives. They’ll be shopping for better mortgages 100 per cent of the time without lifting a finger.
This new world of always-on, ‘passive’ comparison will have huge and fundamental implications for lenders. They’ll no longer be able to rely on inertia to bolster their bottom line. The SVR – that money for old rope for too long – is headed for the scrapheap of financial services history.
Instead, lenders will have to continually compete for borrowers — or become irrelevant. For decades, lenders have been calling the shots. In the future, they’ll have to react to the granular shots of people’s ever-changing circumstances to maintain market share.
Much of the mechanics of the industry will also be dismantled. In the age of the consumer, the ERC will be looked back at as an historical contingency, if not absurdity.
In the future, the industry will be in a race to accommodate the consumer, not the other way around. Everything will revolve around what the consumer wants to buy, not what the industry wants to sell.
The opportunity for brokers is the exponential increase in remortgage volumes, as borrowers are alerted in real time to the prospect of savings right now by lenders fighting and competing to get their business on a case-by-case basis.
Crucially, this isn’t a brave new world that replaces brokers. It’s a world where brokers focus on advising and are embedded in the underlying fabric of their clients’ lives — on hand to guide and add value when the algorithm identifies potential savings.
The future for mortgages is the merger of ‘always-on’ machine and ‘on-standby’ human, aka adviser, intelligence. This is the real revolution within mortgages, not the current false dawn, which is simply a re-modelling of the mortgage industry of old — and that still dances to its tune.
In the future of mortgages, everything will be geared around the consumer, not the industry. Over time, even the term ‘mortgage’ could disappear: it’s a term that exudes the over-riding power of the lender. A power that will soon be gone.
Ross Boyd is founder of Dashly