Two mortgage fintechs have warned that the REA Group and Domain, as well as customers and brokers, could face ‘challenges’ as a result of the property companies’ forays into mortgages.
Last week, both the REA Group and Domain Group revealed plans to break into mortgage broking, with realestate.com.au acquiring a majority stake in mortgage broking franchise business Smartline and entering into a strategic mortgage broking partnership with NAB. Likewise, the Fairfax-owned property classified group announced that it will launch Domain Loan Finder, in partnership with mortgage platform Lendi.
However, Mandeep Sodhi, CEO of online brokerage HashChing, has suggested that the new offerings from Domain and realestate.com.au could upset the market.
He said: “[These sites] have traditionally been seen as helpful, independent websites for consumers to research their next dream home or investment property. However, the most recent partnerships by both with mortgage broking platforms has the potential to restrict choice in the market.
“Pushing borrowers to one group of brokers – who may not have access to all the banks and lenders – means they could unwittingly miss out on home loan products that better suit their needs.”
Mr Sodhi added that brokers could be negatively affected, as the two sites had historically been “strong sources for generating leads for aggregators to date” and brokers who aren’t members of the partnered mortgage broking platforms would have to therefore find new lead sources.
Likewise, the founder and CEO of online brokerage uno. has suggested that while the move by Domain and REA’s realestate.com.au site is “logical”, the companies could face “challenges” while breaking into the mortgage arena.
Speaking to The Adviser, Vince Turner explained: “These guys have a lot of eyeballs, a big audience, and their traditional line of business in terms of advertising [such as website advertising via cost per click] is now going into the nominal value territory. They are not on the way out yet, but they will be soon.
“So, from Domain or REA’s point of view, they have to think what their transactions are that they can monetise … So, you can see why they want to get into transactional mortgages, that's the logical part.”
However, Mr Turner warned that breaking into a new industry (i.e. mortgages) is not only challenging from a cultural perspective, but also from a customer buy-in perspective.
He explained: “You could argue that it's pretty hard to get out of bed in the morning and be a media company [publishing company Fairfax owns Domain] and a financial services company. It’s very different culturally and it’s a very different set of skills, so I think that will be part of the challenge… These things are not natural to them.”
The uno. founder said that his company had partnered with several different companies, but that the thinking was that these partnerships would only be around 10 or 20 per cent of its business.
He said a large part of the difficulty would be getting customer buy-in, as users of the realestate.com.au and Domain are not primarily visiting the sites for a mortgage, but for a property listing/rental listing.
“It's difficult to get a consumer to get onboard with a something that is not what they went to the site for. For example, they are using the sites for real estate, not a mortgage, so it's challenging to get them onboard with this new side," Mr Turner said.
“We know it's challenging because we have been working real estate sites and we operate with other sites that want to bundle mortgages into their consumer experience … [if] the customer didn’t go there for a mortgage, trying to intercept them and say ‘Look at this mortgage over here’, it's difficult.”
Another obstacle that these sites could face is the customer service side of handling a mortgage, Mr Turner said.
“Consumers who are going to these sites are operating digitally, so convincing them to go through the mortgage process, which needs ‘advice’, is challenging,” he said.
Mr Turner revealed that delivering that support and ‘advice’ had been a challenge for uno. and explained that, although he believes the online brokerage is “leading this space in delivering an advice experience and the support experience digitally”, it had spent the last year trying to solve this conundrum and “still has a long way to go”.
“I think it's going to be a long road for Domain and REA in getting this to work for them,” he added.
“I think they have the pockets to push it and they have made it a strategic priority (and maybe they will get there in the end), but its not as simple as just bolting on a mortgage broking business. It’s a lot more complicated than that.”
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