Since the slightly annoying, yet somehow loveable, Meerkat came into our households with a message for cheaper car insurance, we have expected transparent prices and cheap deals.
However, the housing market has been a step behind in this regard and people have been confused and bamboozled by a bombardment of legalese and threats of fees when switching mortgages.
Hoping to change the energy industry first, Go Compare partner organisation Weflip use an automated service to automatically switch its users’ tariff whenever a better deal arrives, as long as the saving exceeds £50.
Economist David Hillier from Strathclyde Business School and broker firm Freedom Finance commissioned research into British switching patterns. Their research confirmed that we waste more than £18 billion a year because of a fear of switching companies.
It is this notion of loyalty penalties that many firms are planning to shatter. Weflip, in particular, have vocalised their desire to Segway into and revolutionise the remortgaging market in the very near future.
Henry de Zoete, Co-founder of Look after my bills, said: “anything that raised the profile of auto-switching was a positive step. The key question for anybody signing up is trust. Price comparison sites have a chequered past, to say the least, when it comes to doing the right thing.”
David Hollingworth, of mortgage broker L&C: “We want to move to a position where people are getting better value, that’s what we all strive for.
“But when it comes to handing over control of something as big as a mortgage, I think there are questions that would need to be answered.”
The fact remains that transparency of price should embolden consumers to pursue better deals in a property market that currently bewilders the layman.
Whilst this may be the future of mortgages, some have warned of the problems that an over reliance on automated services can create. The digital mortgage broker, Habito, blends human interaction with an automated algorithm that looks for the best deal.
One landlord switched mortgages on the advice of a human employee as opposed to the automated advice and found that the tenant in place was in breach of the mortgage agreement because they were paid housing allowance. The lender demanded the landlord evict the tenant or pay a £2,500 early exit fee. Although this may have been a human error, the broker was using the information of the automated service to inform their decision.
The question remains: will the consumer trust an automated system to remortgage on their behalf? Will lenders make this process easy? Will this type of technology help the consumer to find the right deal at the right time to save them money? Despite the current questions remaining hypothetical, many switching platforms are adamant that a shake up to the housing market is not far away.
Will this technology help cure our fear of switching companies? Will it encourage lenders to ensure that a consumer is on the best deal at all times as opposed to a short-term introductory offer?