Mortgage technology pioneer Brett Spencer has identified a gap in the market for a mezzanine-style debt facility that would help brokers settle more home loans in a rising market.
Speaking to The Adviser, former Stargate Group CEO Brett Spencer explained that Australians are missing out on buying the property they desire as prices outpace their ability to save.
“With growing property prices today, you hear a lot of stories about the consumer who has a preapproval for X dollars, goes to market and misses out by $20,000,” Mr Spencer said.
“They come back and the broker’s response is they need to save, or they need to borrow the money from their parents, but it’s too late – you’ve missed the property,” he said. “Saving today a lot more difficult to saving was 15 years ago. People love to spend money. We’re a spending society.”
To combat this issue, the fintech consultant suggested that a lender should launch an “add-on product” similar to a mezzanine-debt facility that wouldn’t affect the borrower’s serviceability.
“It doesn’t affect the ability for someone to still obtain that mortgage but gives them some comfort, almost like a buffer or a cushion to go to auction,” he said.
“There are opportunities there. Something that can help bridge the gap between where they are at and what their actual goal is - that’s really innovative.
“I’m sure somebody out there will do that and help brokers effectively close more deals for their customers.”
Mr Spencer is confident that mortgage brokers will remain relevant in an increasingly complex lending market, despite the threat of digital disruption. He thinks anyone who believes the broking industry is being replaced by technology is talking “absolute rubbish”.
The fact an abundance of “fintech” solutions are coming to the market, he says, is exactly the main driver behind brokers remaining relevant and increasingly relied upon by consumers.
He explained: “The reason brokers are here and will continue to be here, and market share will grow... is that the sheer proliferation of the number of mortgage products in the market today is in the thousands.
“You talk to any one lender and they might say they have three products, but there are probably 30 variations on those products. Joe Consumer just doesn’t understand it.
“No matter how good an online platform you have, no matter how good a technology solution you have — Joe Consumer still wants to talk to a broker who is the expertise. And so, brokers will be here to stay. There is no question about it.”