The growth of rate comparison sites over the last six years has paralleled the surge in online mortgage shopping.
With the burgeoning demographic of web-savvy mortgage consumers comes greater demand for decision support tools. More than a few firms in our space are presently developing technology to help borrowers compare rates, costs, features and terms.
The latest example comes from RateHub.ca, which just got a grant from the National Research Council of Canada’s Industrial Assistance Program (NRC-IRAP). RateHub will receive up to half a million dollars to develop personalized online product recommendations for its site users. (By the way, this funding is available to other industry participants as well, but the qualification process is not easy.)
RateHub says its technology will allow users, among other things, to enter detailed financial information and receive personalized mortgage product recommendations. The site will develop tools for credit card, savings account and insurance comparisons as well.
“The benefit to the mortgage shopper is being able to go online at their convenience and find a product that is suited to their individual situation,” RateHub CEO Alyssa Furtado told us. “It will make the at-home, online research process much more accurate and seamless. As mortgage brokers know, not all borrowers are created equal. We want to improve the online experience, and take specific borrowing circumstances into consideration, such as investment properties, those with income from freelance work, etc., to help the user find what they are looking for and deliver a tailored rate and product.”
This naturally begs the question: Could automated mortgage recommendations ever replace the advice of a mortgage professional?”
Furtado doesn’t go that far, at least publicly. She sees the increasing range of tools available to web-based consumers as complementary to the services of a broker rather than being in direct competition.
“They can and do work hand-in-hand,” she said. “We know most consumers start their mortgage research online, and there is an expectation by the average user to be able to find the information they are searching for [online].”
“A mortgage broker will always have offline experience and be able to offer offline services that benefit the (more knowledgeable) mortgage buyer, like being able to negotiate on behalf of the customer.”
The risk is that consumers blindly gravitate to the lowest rate, or that the comparison technology leaves out key contract considerations.
Those concerns aside, the ability to better filter mortgage options online saves people time and makes for smarter borrowers. That’s clearly a win for consumers as information power leads to more effective negotiating and lower borrowing costs.
Sidebar: Here’s some technical research if you want to read more on the cost of information asymmetry in Canada’s mortgage market.
By Steve Huebl & Robert McLister
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