Will a move to digital advice affect the 'vanilla' mortgage market?

Will a move to digital advice affect the 'vanilla' mortgage market?
The pace of change we’ll see over the next 10 years in this space will be much bigger than we think it’s going to be

According to Adrian Moloney of OneSavings Bank, growth in digital advice as the mortgage industry embraces new technologies will have a considerable impact in the ‘vanilla’ market.

Moloney, was speaking as part of a panel of experts at yesterday’s FSE Manchester event, and said: “I don’t see digital advice as a major threat to advisers but I can see it delivering real change to the execution-only, vanilla, prime, residential remortgage market.”

Louisa Sedgwick of Vida Homeloans agreed: “The mainstream market will, I think, absolutely go down the digital advice route however the specialist market is very different. I think those specialist customers are never going to apply for a specialist mortgage via that route simply because it’s much too complex.”

When asked whether the provision of digital advice was either a threat or an opportunity, Rob Jupp of Brightstar, said: “It’s a threat obviously, but also an opportunity. It will be incredibly helpful for advisers, for example, in terms of the way that we get bank information from clients. We also have to accept that a different generation will want to do things differently – our kids will do things differently to us. I also think that the pace of change we’ll see over the next 10 years in this space will be much bigger than we think it’s going to be. However, as advisers we’ve gone through decades of change and in that sense it’s a really good opportunity.”


The panel were also asked to highlight the product sectors and the ways in which advisers could ‘win in 2017’. Gary Bailey of Together suggested that the second-charge market could be an area to concentrate on: “There are great opportunities in the second-charge mortgage market, especially for those clients who have excellent first-charge mortgage rates which they don’t wish to lose.”

Moloney agreed: “We’ve never seen second charge mortgage rates so low at the moment and it is an opportunity for brokers that should be considered. The real challenge here however is that in a low-interest rate environment, there’s probably more demand for firsts.”

Moloney also highlighted the potential within the later life lending and equity release sectors. He said: “Equity release has some traction and again rates are pretty low: this is a market of opportunity and I think we’ll see more specialists coming into it.”

Jupp however said that it was time to end the disconnect between advisers offering just later life mortgage advice and those just offering equity release advice. “If you carry out equity release advice, you should be doing both this and later life mortgages,” he said. “It’s not difficult and good advisers should be able to do this in their sleep. My concern is whether elderly people are just being given equity release advice.”

Sedgwick also said advisers should be aware of the potential that exists in the specialist adverse market. “Last year 900,000 CCJs were registered – mainly by utility or phone companies,” she said. “Those customers won’t be able to get a mortgage from a mainstream lender and therefore they’re going to need advice.”

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