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Consumer-brokered mortgages the new distribution channel

James Mitchell 3 minute read

Consumer-brokered home loans are the “next wave” of innovation, especially given the increasing number of online mortgage platforms hitting the market, says an industry veteran.

Listed mortgage aggregator AFG recently announced it terminated its agreement with Hero Broker, an online mortgage platform that pays borrowers the same upfront commission as a broker for completing their entire loan process online.

The controversial platform is not the only disruptor to hit the local mortgage market in recent weeks.

Industry veteran Vincent Turner told The Adviser that his new fintech company uno is also redefining the way consumers secure a home loan. Uno, which allows consumers to broker their own deals, caters to a generation eager to use online platforms for their home lending needs, Mr Turner said.

“The unit economics part of our proposition is not about trying to get the commission from the bank and hand it back to the consumer. For me, that unit economics doesn’t stack up at all. We need to provide an outcome and a service. Our role is to just reinvest that differently because customers expect more out of the platform,” he said.

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“The people who work for us come out of the industry. Their remuneration structure is to earn a salary and be incentivised based on customer satisfaction, rather than how many deals they closed.”

Mr Turner recently returned to Australia from San Francisco, where he had spent years developing fintech in the mortgage and real estate space.

He found companies in San Francisco that were becoming successful were financial services businesses that leveraged technology.

“Either they were changing the unit economics around customer acquisition or they were changing the economics around the customer service proposition and usually redefining the customer experience in the process,” Mr Turner said.

Or they were finding mispriced parts of the market... whether it was student lending or wealth management or mortgages.”

With his extensive experience in the local mortgage space, Mr Turner figured home loans was the obvious market to develop something new.

The uno online service gives consumers access to the same tools and information traditional brokers use to find a home loan, providing them with the power to decide what is best for them. It also allows consumers to access real time home loan rates based on their personal situations – not just advertised rates.

“We think of this as the third wave,” Mr Turner said. “Traditionally you’ve just had banks, going way back. Then you had brokers come into the market. We see this consumer-brokered mortgage as the next wave of what is possible.

“I think there is a whole segment of consumers who will say, ‘This is how I want to get access to a mortgage because I want to use a platform’. They don’t want to do it alone, they still want help, but what they want is a screen.

“There is a whole generation of people who have a screen to access so many other services in other verticals.”

Mr Turner believes online platforms such as uno will not replace banks, nor does he see it replacing mortgage brokers.

“We think there is a whole generation of people and a growing segment of the market who want to do more of this themselves and expect that from their service providers.”

[Related: AFG terminates agreement with new mortgage player]

Consumer-brokered mortgages the new distribution channel
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

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