Fewer people than expected are using the internet to take out a mortgage, according to the Council of Mortgage Lenders (CML).
While the internet is popular with customers for gaining information and comparing products, the number of online mortgage applications remains low, according to research into the changing nature of the UK mortgage market.
The CML research, undertaken in conjunction with analysts KPMG, found internet growth has encouraged new entrants into the industry and led to significant investment to make online mortgage applications possible, but customers still want face-to-face contact when making such a large commitment.
Simon Nixon, chief executive of moneysupermarket.com, the online mortgage product search tool provider, agrees with the findings.
He said: ‘If you look at research from two or three years ago, predictions were that by 2005 about 10% of consumers would compare and buy online from providers. This has been reassessed to about 3%. Analysts did not realise how complex mortgages are for the public.’
Commenting, Peter Williams, CML’s deputy director general, said: ‘Intense competition, greater use of technology, growing customer sophistication and changing work and lifestyle patterns will fuel further structural change in the UK mortgage market in the coming years. Developments like the possibility of Britain joining the euro and Basel II Capital Accord (international banking standards) will also affect the structure of the market.’
But Nixon still sees the internet as a major sales tool that generates leads for intermediaries.
He said: ‘People compare online because it gives background research for when they visit an adviser. Out of 6,000 people comparing online, only 30 will buy ‘ these are people who have remortgaged several times and know exactly what they want. The rest need to be referred to an adviser. We are currently running around 200 leads a day.
The conclusion of the report, is that the UK mortgage market is undergoing a fundamental change and becoming more diverse. Lenders are increasingly special-ised in a bid to drive down costs in a highly competitive sector.