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URL never work alone

There are good reasons why online mortgage delivery has failed to take off in the UK.

A mortgage decision cannot be taken
lightly and certainly not without advice or guidance.

Research by mortgageforce has found that fewer than 10 per cent of
respondents are prepared to buy a mortgage without advice. Even the
most experienced mortgage hunters prefer to take some level of
advice, whether it is simply ratification of their decision or the
complete advice process.

I do not believe the internet has yet provided the comfort and
reassurance that clients demand. My review of consumer internet
mortgage solutions is placed in the context that most consumers find
mortgage selection daunting and want professional guidance. It seems
this guidance and comfort cannot be delivered by internet solutions.

There have been many attempts to make online delivery work profitably
in the UK and almost all have failed. As well as dozens or perhaps
hundreds of private UK businesses, some big international names have
had a bash at the online market, often spending millions of pounds
promoting the URL, then packed up and gone home.

Names such as lendingtree, theloanhub, fredfinds, mymortgage,
netmortgage, findmeamortgage and simplymortgage have all failed to
create or sustain a position in the UK market. Perhaps the highest
profile sites were netmortgage and Eloan – the former an excellent
site with a highly credible parent in Savills and the latter a tried
and tested business which dominates the US market. Eloan closed its
operations in Australia, Japan, the UK and Germany. Both netmortgage
and Eloan reached the realisation that the UK market would not
respond soon enough for their model to deliver adequate returns.

The relative lack of success that the online mortgage market has seen
in the UK is not wholly a reflection of the channel being immature.
After all, online mortgage acquisition was available from 1996,
primarily in the US and Canada.

Mortgagechoice in Sydney was offering mortgages online from the
mid-1990s and still provides consumers with access via the web but
now strongly encourages face-to-face advice following a web search
and selection. This is borne out of its belief that online fulfilment
is not enough to win consumers in adequate volumes.

Mortgage IT and strategy consultant Frank Eve says: “The main
problem that online brokers have had is their lack of technology and
process to convert enquiries to deals. In the US, they now refer to
their proven and effective process as ‘high-tech, high touch’, such
that they make it extremely easy for customers to enter personal
details and then every client gets a personal consultant to follow up
and follow through by phone, mail and so on. It is this human
interaction and control which makes the system work.”

Eve points out that some of the hugely successful overseas online
brokers have a distinct financial model where their funding is via
correspondent lending, providing far more revenue as well as
transactional control and speed.

Six years on since mortgages were first available on the internet,
many fantastic propositions abound on mortgage sites. “Find your
mortgage here in under 10 minutes,” boasts
“Mortgage decision online within a couple of minutes,” declares the
Halifax. “Find the best deal to suit your needs at the touch of a
button,” says “Apply online in minutes” and “A
real offer within hours,” offers (“Continental USA,
Alaska and Hawaii only.”)All these work on the premise that a
consumer wants to find a mortgage in less time than it takes to pour
the hot water over the Earl Grey teabag and get the result.

I believe this tendency to lead on the speed of fulfilment is
appropriate for business-to-business offerings but secondary for the
typical consumer. Yes, he or she wants to move around the site
smoothly and easily without having to key in the same information
repeatedly or face repetitive or irrelevant questioning but getting a
loan approval quicker than fast-food order is not that appealing.

Supporting this theory, a spokesman for Halifax – which pioneered the
15-minute mortgage promise – comments that the 15-minute campaign was
welcomed by most but some customers felt the approval certificate was
not worth the paper it was written on as it was issued after very
little underwriting or referencing.

The mortgageforce research suggests that a prime focus on instant
delivery can undermine the internet mortgage proposition as it raises
questions in the client’s mind over the validity of the information
being provided online. Clients assume that such important financial
matters must take a little longer and instant information is met with
more suspicion than satisfaction.

It is this commonly held perception of the complexxity of the
mortgage arena that makes point-of-sale mortgage-sourcing systems
such as Mortgage Brain so effective. Clients like to see the myriad
of lenders, hundreds of competing products and the adviser’s donkey
work and expertise applied to filtering down from 4,000 to four.
Anything more instant seems suspiciously uncomplicated. But it is
that consumers are more comfortable to go online and begin a mortgage

Like the successful Australian and US operations (and the few which
are prospering in the UK), businesses serious about making internet
mortgage broking work will need to give the individual the option of
how to communicate with them. That is likely to demand a mixture of
online, call centre and face-to-face interaction.

The internet is a fantastic means of generating business interest
online but most users will continue to refuse to fulfil online.
Advice along the way is still essentially desired.

Several firms have set out a strategy to partner national franchised
networks and big broker firms to provide this crucial advice and
fulfilment. These have included mortgage2000 and,
which have the power to generate thousands of leads but say there is
a need for a professional and effective intermediary delivery
mechanism combining the power of the internet with good old-fashioned
face-to-face advice.


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