Should you get a mortgage from a robot?
What do robo-mortgage advisers add to the process? Emma Lunn reports.
Would you trust an automated online service to recommend a product for the biggest financial transaction you're ever likely to make?
An ever-expanding raft of "robo" mortgage advisers offer to do just that. These fintech companies all have quirky names such as Trussle, Dashly, Habito and MortgageGym but beyond the flashy marketing, they all offer a fairly similar level of service, and come with similar limitations.
Habito is free for customers to use. Like all brokers, it's paid by lenders when a case reaches completion. Customers talk to a "chatbot", which checks more than 20,000 mortgages from more than 90 lenders. But after the initial search, Habito works like any other mortgage broker you have to talk through your options with a human.
Another robo-adviser, Trussle, claims it can save borrowers an average of £4,000 a year. To find the best deal, you complete your Trussle profile, and its staff then search more than 11,000 mortgage products to find the best one for you. It also offers a free "mortgage-monitoring service" that keeps track of your current mortgage, notifying you when you can switch to a more suitable deal. However, the monitoring service requires regular user input borrowers must update their details every three months to ensure an accurate comparison.
Rival Dashly automatically updates your mortgage balance, remaining term, loan-to-value ratio and property valuation on a monthly basis, negating the need for further customer input, and then automatically alerts you if you could save money by remortgaging. But as with other robo-advisers, Dashly doesn't offer a completely automated process. Behind the scenes are real brokers ready to help borrowers.
Finally, MortgageGym reckons it can save borrowers an average of £500 on brokers' fees and, after you've provided your information, can match you to a suitable mortgage product in 60 seconds.But again, it's then down to a real-life broker to help with your application and see the deal throughto completion.
Generally, the appeal of going through a "robo" version of anything is that it should save you time and money (and can be good for those who are especially averse to human contact). But given that it is possible to go with a mortgage broker that doesn't charge fees, and that many robo-advisers require a fair amount of ongoing engagement from you, it's difficult to see the appeal of the latter. If you can find one that will save you on fees, and that gives you access to all the products on the market (which not all brokers do), then by all means go digital, but there doesn't seem to be much advantage to going with a robo-adviser for the sake of it. (Also keep in mind that they might struggle with non-standard applications, such as if you're self-employed.)
House prices slump
House prices in British cities are growing at their slowest rate in five years, according to property market analyst Hometrack. Meanwhile, prices in London look set to end the year down for only the second time in 23 years.
Overall, the national rate of house-price growth in the UK slowed to 2.6% in the year to November. The slowdown was driven primarily by a loss of steam in southern cities. Of all the major cities, Edinburgh saw prices grow most rapidly up 6.6% on the year. However, in common with most other cities, that was slower than in 2017 only Manchester (up 6.6%), Liverpool (up 5.3%), Cardiff (up 5.1%), and Newcastle (up 4.8%) proved exceptions.
Prices for London as a whole were down 0.1% in the year to November, but prices in the most expensive parts of the capital covering areas such as Mayfair, Chelsea and Notting Hill were down by 4.4%. Those hoping to snap up a bargain may have to wait though. In 2016 the price of the average house in London peaked at 14 times the average salary, but the ratio hasn't corrected by much since it "remains stretched at 13.3 times".
And it's not just a London story. Prices in both Oxford and Cambridge which have seen prices soar well beyond average incomes in recent years ended the year flat or falling. Meanwhile, Aberdeen where the property market has been hit by falling oil prices has seen the most significant falls outside of central London this year, with prices down 4.1%, after a fall of 3.3% last year.