There are a slew of rate comparison sites out there, but they all present a similar challenge for consumers. People are forced to call a broker or lender to know if they qualify for the rates being advertised.
Kanetix.ca believes it has a better approach. On Monday it launched a revamped version of its rate comparison site that helps consumers get firm quotes with minimal human interaction.
“A lot of websites give you a teaser rate and make you contact the broker for details,” says Yousry Bissada, President and CEO of Kanetix Ltd. “At Kanetix you get an actual pre-approved rate online.”
To do that, Kanetix takes a mini-application and Equifax checks the person’s credit – all online – to confirm qualifications. (It’s a “soft” credit check that doesn’t adversely impact your score.)
Once clients are pre-qualified online, they receive a rate quote and “pre-approval certificate” and are contacted by the call centre of Invis-Mortgage Intelligence, a national brokerage.
From there, a call centre rep (or Invis-MI broker, if it’s not a straightforward deal) completes the application with the client and forwards it to the lender for underwriting.
“This is exactly how it works on the insurance side,” Bissada says.
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The proposed benefits to the client are a wide choice of lenders and options (via the Kanetix website), fast online pre-approval, low rates and no need to travel to a branch or broker’s office.
At the moment, the site has a more limited number of lender options than competitors like Ratehub and RateSupermarket. But that may change. Moreover, Kanetix displays only actionable discounted rates as opposed to sprinkling in lenders who advertise only posted rates.
It’s also important to note that Kanetix pre-approval doesn’t absolutely guarantee you the rate. The rate is contingent on an appraisal, underwriting and so on. “But it’s certainly a lot more firm than most rate comparison sites,” Bissada says.
One interesting part is that the leads are sent to a call centre, as opposed to a full-service mortgage planner. That’s presumably to keep costs low so the client can get a better rate.
Our first thought after hearing the phrase “call centre,” was: “What will Invis-MI’s 1,000+ brokers think of this?”
It turns out that Invis-MI brokers will benefit by being referred clients who don’t meet normal lending standards—a portion of the market that’s rapidly growing thanks to new mortgage regulations.
The goal, says Invis-MI CEO Bob Ord, is to maximize the number of qualified leads Invis-MI receives so brokers aren’t dependent on traditional referral sources like Realtors.
“These are applicants who want to deal online,” Ord explains. “If they wanted to talk to a live body they would have called a broker or gone to a branch.”
“It’s a huge opportunity,” adds Ord. “I believe there’s probably 5-10 per cent of the public who are qualified and will close online. The other 90 per cent will be opportunities for the traditional broker market.”
(CAAMP data from 2011 indicated that approximately 158,000 residential mortgages close in the average month.)
Because it’s a new model, Bissada says he chose one brokerage to work with initially and one defined area (Ontario). “Invis-MI is highly capable and has an established call centre, so it was a good fit.”
What’s in it for Kanetix?
Kanetix makes its money by being paid for the referrals.
Longer term, our sense is that Kanetix wants to build this portal and send qualified leads to several brokerages and/or lenders. In fact, as soon as I saw this news, I thought of MortgageBot, a subsidiary of D+H in the U.S. MortgageBot does something similar and is very successful with 1,100+ banks and credit unions on its system.
“Online is coming and we want to do it well,” says Bissada. His other business, insurance, is Kanetix’s bread and butter and the upside there is enormous. “Only 12 per cent of Canadians apply for insurance online. That compares to 70 per cent in the U.K. and 30 per cent in the U.S.,” he says.
More interestingly, Kanetix research shows that 55 per cent of people don’t even know insurance comparison websites exist. Bissada says that number is even higher for mortgage comparison sites.
“Canada is as tech savvy as any of those countries,” he says. “It is early days” in the online mortgage space.
Back to the Past
“Back in 2000 when we started Filogix, we expected the majority of mortgage shopping to occur online,” says Ord. “Invis-MI built call centres to handle that flow.”
“Our experience, however, was that mortgage shoppers would accept a commitment, take it to their bank, and the bank would undercut it. The web strategy was then abandoned,” he says.
But fast forward a decade and now virtually everyone shops online. With the right client experience, Ord and Bissada believe their venture will succeed.
“Online is a new channel that no one can stop,” says Bissada. “Online is not going to be 20-30 per cent of originations, but it won’t be just a blip either.”