Technology has, indeed, begun transforming the mortgage industry, and if Homewise is any indication, the change is momentous.
Although a mortgage brokerage in execution, Homewise is a tech company in spirit that endeavours to make originating mortgages easy for borrowers, brokers and lenders. By filling out an online application, users provide Homewise a profile for which the latter tailors solutions. In today’s regulatory environment, says Homewise’s founder and CEO, using wide parameters to service clients is no longer sufficient.
“We provide free advice to clients about what their affordability is, how much mortgage they can actually get to find a property and then which steps to take to realize their homeownership dreams,” said Jesse Abrams.
“There’s a lot of media out there about how difficult buying a house is because of the stress test and increasing interest rates, so to have an application without a lot of barriers is helpful,”
With over 30 lenders in its system—including A banks, credit unions and monolines—Homewise matches client to fund provider by observing broader criteria. The application takes roughly five minutes to fill out, at which point Homewise mortgage and tech experts take over.
“A big part of our target market is the first-time buyer,” said Abrams, “and the average first-time buyer doesn’t live five full years in that property, so offering a five-year fixed mortgage doesn’t make sense. Rather than attracting them with the lowest rate, we want to attract them with the best package: Good rates, features, terms, length of terms—because the best mortgage for that person might be a three-year fixed or a four-year variable, the reason being that penalties are lower if they’re able to break their mortgage.
“Portability is also important because a lot of first-time buyers who buy a condo might meet a significant other who has their own property, or maybe they want to buy a place together, so enabling them to make the right decisions early on mitigates big penalties later in the process simply because they were looking for a couple of basis points lower of a rate at the outset.”
Millennials comprise about 75% of first-time buyers, according to a Genworth Canada study, and they just happen to be incredibly tech savvy. Moreover, the same study notes that first-time buyers are the fastest growing home-buying cohort in the country.
“The millennial homebuyer is a growing demographic and they like doing things online, and quickly, and they don’t always like face-to-face interaction,” said Abrams. “It’s a busy generation and there’s a lot of technology that they like to use.”
It helps that the entire Homewise team is composed of millennials who understand changed consumer expectations because they’re helping drive them.
“We’re using technology to focus on doing less administrative work and doing more on the advisory side of the business by making it easier for clients and more efficient for lenders and brokers to find the right product for each consumer.