Online mortgage broker uno Home Loans has launched a digital monitoring tool, allowing customers to compare their home loans with competitive deals on the market.
The new digital monitoring tool, loanScore, enables customers to compare their loan against other deals offered by uno’s panel of 24 lenders, including the four big banks.
According to a study conducted by CoreData in July 2018, 53 per cent of Australians do not know what their home loan rate is, 26 per cent are not confident they have the best deal, and 31 per cent have never compared their loan in the mortgage market.
By providing up-to-date details of their loans and nominating “what is important to them in a loan, such as lender type, structure and optional features such as offset account, redraw facility, or extra repayments,” the algorithm then rates the customer’s existing loan on a score of 1-100.
“The higher the score, the better the deal,” the online brokerage outlined.
The fintech reportedly uses an algorithm to monitor the mortgage market and rate user loans against competitive deals, “providing a regular evaluation as to whether or not the customer has a good deal.”
“The monthly update includes an estimate of the annual savings if the customer was to switch to their best value loan, and ways to improve their current loan – such as asking for a rate cut, changing repayment frequency, and making extra repayments,” the fintech elaborated.
Uno would then work with the customer to improve their loan with their current lender, should they so wish, the brokerage said.
Anthony Justice, CEO of uno Home Loans, said that loanScore enables users to be proactive in “managing their loan on an ongoing basis” by providing monthly updates on competitive home loan rates.
“Loyal customers overpay thousands of dollars by staying on the same deal for years and are often unaware there is a better option.”
“LoanScore gives the power back to the customer by proactively letting them know each month whether or not they are on a good deal.
“Having this information, in the palm of their hand, helps customers move from “setting and forgetting” to actively managing their loan on an ongoing basis,” he said.
“The most important thing is that customers know whether they are getting a good deal or not,” Mr Justice added.
The new tool comes amid growing calls for increased transparency around mortgage pricing.
In December last year, the Australian Competition and Consumer Commission (ACCC) released the final report of its mortgage price inquiry, which monitored the prices charged by the five banks affected by the government’s major bank levy between 9 May 2017 and 30 June 2018.
The report was initiated by the commission after the Treasurer directed the body to inquire into prices charged by the financial institutions affected by the major bank levy (ANZ, CBA, NAB, Westpac and Macquarie Bank) to understand whether the costs of the levy were being passed on to borrowers.
While the ACCC did not find evidence that the five banks were changing prices specifically to cover the cost of the levy (whether in part or in full) over the monitoring period, it did find that the mortgage market was characterised by “opaque discretionary pricing practices” that cause “inefficiency” and “stifle price competition”.
ACCC chair Rod Sims said: “Pricing for mortgages is opaque and the big four banks have a lot of discretion. The banks profit from this, and it is against their interests to make pricing transparent.
“Borrowers may not be aware they can negotiate with their lender on price, both before and, particularly, after they have established their mortgage.”
Annie Kane is the editor of The Adviser magazine, Australia’s leading magazine for mortgage brokers.
As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also the host of the Elite Broker podcast and regulator contributor to the Mortgage Business Uncut podcast.
Before joining The Adviser team at Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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