By Rachel Williams
Uptake of internet mortgages is set to increase by 153% in the next four years, according to the latest Datamonitor report, UK Mortgages 2000.
In 1999 the internet accounted for 0.1% of mortgages. However, the report expects this figure to rise to 9.2% by 2004, overtaking the telephone as a distribution channel which currently accounts for 6% of mortgages.
Despite growth in the internet as a distribution channel, the role of the intermediary is not expected to weaken, and e-intermediaries are expected to play an important role. The report said: “Intermediaries will grow as a distribution channel partly as a result of the positive impact the internet will have on their business. As more customers use the internet to arrange a mortgage, they will increasingly move away from visiting a single lender’s site. Intermediaries are able to offer a range of quotes from various lenders for the same time spent on information input.”
But Tony Yorke, communications manager at i-group, was not convinced the industry will see such dramatic levels of growth. He said: “This is a staggering claim. At the moment less than 20% of the population has internet access and for many, applying online can still be a time consuming and lengthy process.”
While more borrowers will be willing to use the internet to buy a mortgage, increasing numbers will want advice before they buy their mortgage, according to the report. It said: “As products become more complex, the average consumer will be less confident in choosing them. This is particularly true of flexible mortgages, as they have numerous terms and conditions as well as various options available to the consumer.”
Natasha Plackett, PR manager at First Active, agreed. “There are now so many more lenders and so many more product offerings and borrowers simply do not understand them so they need to get advice from someone with a high level of knowledge.”
The report also found that rationalisation in lender’s branch networks will create opportunities for intermediaries. It said: “This should be a positive development for intermediaries. The demand for face to face advice will remain, but in some areas as branches close, this will not be met by a nearby branch of the bank of the customer’s choice. In this instance, borrowers are more likely to turn to intermediaries for advice.”