Google’s launch of a mortgage comparison and lead-generation facility in the US has prompted speculation the internet giant may make a similar move in the UK which could transform the market.
Google’s Adwords Comparison Ads are being piloted in America. The concept is simple – consumers enter mortgage-related words into Google to compare mortgage rates from providers.
Once the consumer requests a quote, Google forwards the details to the advertiser, who then pays the web company per lead. The service requires very little personal data from the prospective borrower.
Many believe there is a strong possibility that Google will set up a similar facility for the UK – where 90 per cent of internet searches are through Google – if comparison ads are a success in the US.
Mortgage Brain chief executive Mark Lofthouse says it would be a natural progression for Google to launch the service in the UK but the two mortgage markets are very different and the model would have to be adapted.
He says: “Google would have to look at how the UK market really works. We have got something like 60 per cent of our mortgages going through brokers, so it is a very active broker channel.”
Lofthouse adds that Google would be foolish not to use brokers if it launches in Britain.
He says: “One of the philosophies of Google is that it must give the customer what they want. So, in our market, with more than 60 per cent of mortgages arranged by brokers, it would be remiss of any company to ignore the broker channel and go straight to the lenders.”
But Financial Technology Research Centre director Ian McKenna says a UK version of comparison ads would transform the mortgage industry.
He says: “Once it launches, the UK mortgage industry will never be the same again. You will still have a mortgage broking market but it is probably going to go back to where it was in the 1970s and early 1980s – a niche thing, rather than mainstream.
“Google is building some immensely impressive technology and anyone who thinks it cannot take the UK mortgage market apart at any moment is being naive.”
Despite consumers using the web for more and more transactions, Exact managing director Alan Cleary believes people remain generally uneasy with the idea of buying a mortgage online and would prefer face-to-face contact. He does not see Google making a big impact in the UK market in the short term.
He says: “It is like getting your car fixed – most people would still go to a garage rather than buy a manual and try to sort it out themselves.”
Futurist David Smith. Smith, who is chief executive of Global Futures & Foresight, says people are already comfortable with buying most things over the internet but he does not think Google will force brokers out of business.
He says: “People are much more at ease with buying online. It is up to the individual and depends on the type of product. If a product is complex, some people will need to have it explained to them. But for simpler products that can be easily understood, people are quite happy to transact online without an intermediary.”