Property

Why is everyone trying to sell me a mortgage?

By Oliver Smith 26 January 2017
Summary

Your boring mortgage is getting a high-tech overhaul from Habito and Trussle.

Buying a house is a big deal.

A decade ago it involved booking a meeting with your bank manager, donning your smartest outfit, and trying to persuade a lender to give you a mortgage.

Today times have certainly changed – not least the prices of properties, especially in London, have gone through the roof.

But there’s another change in the air, you might’ve started noticing the adverts popping up on the underground…

Today there are a host of new names springing up in the world of property lending, names like Habito and Trussle, all eager to help you on the property ladder.

Read more: How Trussle’s one-click mortgages are shaking up the housing market

Trussle & Habito

Trussle and Habito (which raised a new £5.5m funding round on Monday) are shaking up the housing market with one-click mortgages.

Both companies boast that their services are better than what the humble human mortgage broker can offer.

“It’s a bit of a shock for people on the high street, because they’re so used to walking into a bank branch,” Trussle CEO Ishaan Malhi told The Memo last year.

The services do still rely on a human touch, but only once a computer has scanned hundreds of deals to narrow down the ones that might suit you best.

“Machines are great at spotting patterns, doing arithmetic and moving data around – but human expertise will remain a key component of a market this complex for some time to come,” Habito CEO Daniel Hegarty told The Memo last year.

New technologies and the ability to scan and compare hundreds of mortgages in seconds are certainly part of the reason why everyone’s trying to sell you a mortgage.

But there is another reason why, especially right now, mortgages are so in vogue.

Read more: These robots are racing to replace mortgage brokers

The economic reason

If you didn’t notice, in the wake of Britain’s vote to leave the European Union, the Bank of England took the huge decision to slash interest rates to 0.25% – their lowest level in the 322 year history of the Bank.

That resulted in two important things.

First, it means the already meagre interest level on your savings accounts fell a little further.

But, more importantly, it means the interest levels on mortgages have also fallen, making mortgages cheaper than almost ever before in history.

Indeed just after the rate cut the Yorkshire Building Society unveiled a mortgage with an unprecedented 0.98% discounted interest rate – compare that to the late 1990s when interest rates of 9.50% were standard.

And that’s why, more likely than not, you’re about to see many more adverts encouraging you to get a mortgage.

Read more: Why is everyone trying to sell me a mattress?