FHBs overwhelmingly opt for low tech lending

The majority of first home buyers prefer face-to-face interaction over more technological solutions when applying for a home loan



First home buyers are avoiding technology in the home application process – a finding revealed through research by South Australian lender HomeStart Finance.
The recently released HomeStart Finance First Home Buyer Index found that 74% of all FHBs surveyed would prefer to communicate with a lender face-to-face than via technology.
The remaining 26% is made up of borrowers more comfortable with high tech solutions than meeting in person and can be broken down into the following categories:
  • Online written applications (16%)
  • Telephone applications (6%)
  • Online applications via Skype (2%)
These findings show that either first home buyers don’t value digital disruption in the mortgage space or that present-day disruptors are failing to deliver on their needs, Deb Dickson, head of retail at HomeStart, told Australian Broker.
“Many of the industries where digital disruptors have had cut-through are where there is a low-cost or value to the transactions,” she said. “Buying a home is the largest financial decision that most people will ever make and if customers choose the wrong loan product, it could cost them many thousands of dollars to rectify.”
Because of this, consumers may be willing to overlook accessibility and convenience – placing greater value on being able to talk to someone about the transaction.
“It is likely they feel there is an increased level of trust and expertise when they meet face-to-face with a lender or broker, compared to not knowing who or what is behind the computer screen.”
In addition, first home buyers often won’t know the basics about taking out a home loan and will seek answers to questions they may not even know to ask. This cannot be done through a digital transaction, she added.
“I also believe they value the opportunity to develop a relationship with the lender or broker, which starts from pre-application and can last well beyond settlement. There is a comfort of knowing their broker can facilitate the process, and is only a phone call away when another query arises.”
All this is good news, Dickson told Australian Broker, as the findings show that both brokers and home lenders have a clear advantage over existing digital options that are currently available.
HomeStart CEO John Oliver said that traditional home loan application methods are more popular even among Generation Y who have constant access to technology.
“Even though meeting the mortgage broker or bank lender may take a few hours, first-time buyers clearly value the face-to-face meeting over convenience when applying for a loan,” he said.
“With an online application, first-time buyers may feel they don’t have the same level of support, particularly when it comes to answering some of the questions they have.”
However, Oliver said, it is still positive that technology opens up new channels when it comes to applying for a mortgage, as it gives borrowers the option to choose whichever application methods they are most comfortable with.
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