By Enzo Mora, CEO and founder of The Mortgage Brain
I was interested to read a survey by Barratt Homes that said that many buyers are turning to AI to get advice about mortgages although only 7% said they were very confident in the accuracy of the information provided.
This wasn’t surprising considering that Barratt’s analysis of various AI models were found to give different mortgage recommendations for either two or five year mortgages when asked the same question.
Actually applying for a mortgage is more nuanced and when speaking to one of our advisers we’ll ask the right questions to make sure we fully understand our client’s financial position before searching for the best mortgage for them.
However, like many businesses, we’re now using AI in training and compliance to make our business even more efficient.
For example, AI is supporting parts of our administration process, giving advisers more time to focus on listening to customers and delivering advice. The key is ensuring they support advisers rather than replacing human judgement.
£5k deposit mortgage now being launched
First-time buyers who have savings of £5,000 now have the option of applying for Lloyds, Halifax and Bank of Scotland’s new £5,000 deposit mortgage, launched in response to research showing 62% of these buyers say the deposit is their biggest barrier to home ownership, not affordability.
It’s a five-year fixed mortgage for a property worth between £102,000 and £300,000 and all incomes are accepted including anyone who has been self-employed for a year and non UK nationals. It’s just one of the first-time buyer options that our advisers can discuss.
Second thoughts on second homes?
Lender Barclay’s latest insight to the housing market reveals that 22% of homeowners say they would like to own a second home but it feels unaffordable, naming high maintenance and running costs as the main barriers with 21% saying stamp duty costs. Just under half believe owning an additional property is too financially risky in the current economic environment.
For those who have considered or already purchased a second home, the average deposit required is £50,340, alongside stamp duty of £29,849 and third-party costs of £5,698, bringing the total upfront cost to £85,887 on average.
Attitudes are also changing when it comes to buying property as an investment with 36% saying they believe owning additional properties adds pressure to the housing market, while 34% would prefer to invest in the stock market instead of property.
Short-term fixes
New analysis of mortgage search activity by Moneyfactscompare has found that borrowers are increasingly looking to short-term fixed rate mortgages as rates have risen. The percentage of website users comparing two year fixed rate mortgages increased from 48% in February to over 55% in May, while demand for five year fixed deals fell from 28% to 22% over the same time as searches for 10-year fixed rates also fell from 6.5% to 4.5%.
We say it’s never a good idea to try to call the mortgage market, instead we can find our customers the best deal today and reserve this for up to seven months, with the option to switch to a cheaper option if it appears. That’s our in person service at its best that even AI can’t beat.
To find out more about The Mortgage Brain, visit www.themortgagebrain.net or call 0333 340 8888.