Home » Uncategorised »
Open Banking to Disrupt the Mortgage Market
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The arrival of Open Banking, the next phase of which rolls out in January 2018, threatens to disrupt the mortgage market by potentially turning existing lenders into commodities and leaving behind swathes of traditional mortgage brokers, warns Property Master, the UK’s first digital buy-to-let mortgage broker.
While Open Banking offers the potential to disrupt the entire banking market, it may well be the increasingly professionalised world of the private landlord that the effects are felt first, the firm believes.
Angus Stewart, the Chief Executive of Property Master, explains: “By forcing banks to lift the veil on their customers’ transaction data, Open Banking will facilitate the creation of exchanges that will bring together buyers and sellers in the world of finance. In the market in which we operate, I can foresee a time when the data about individual landlords’ portfolios, together with their credit history, is packaged in such a way by companies such as ourselves that individual lenders will be forced to bid for a landlord’s mortgage business, so pushing those lenders into the position of being a commodity item.”
Stewart claims that there are good reasons why private landlords may well be early adopters of such technological change: “The private rental market itself is undergoing a transformation, as landlords adapt to a range of regulatory changes and now rising interest rates. Taken together, these trends are bringing about a greater professionalisation amongst landlords and an appetite for faster, cheaper funding solutions. To date, private landlords have been served by a fragmented marketplace of more than 12,000 traditional brokers typically offering access to a limited panel of lenders. Such brokers have a high cost of doing business based on their lack of scale and expensive advisory staff. For landlords, this has meant a high risk of missing out on the best buy-to-let mortgage deal.”
He continues: “Landlords eager to reduce their costs in the face of challenging market conditions are creating a demand for a more technologically-based solution, making the supply of buy-to-let mortgages the next sector of the property market that is ripe for disruption. Our success to date rests on matching individual landlords’ funding requirements against the real-time lending criteria of every buy-to-let lender in the market. The new regulatory and technological changes we are now seeing will enable us to improve still further the service we provide.”
Make sure you are aware of the forthcoming Open Banking changes.
