The era of millennial mortgages has arrived.
A couple from London are the first homeowners to switch their mortgage automatically and entirely online, without the hassle of searching new deals and lengthy paperwork, thanks to an innovative property technology startup.
Trussle's switching alert lets users know when they should remortgage to find a better deal. And the pair, who first found their two-year mortgage as first-time-buyers via the platform in late 2015, are the first to have landed a new deal on a loan after being alerted.
It's estimated that lapsing into a standard variable rate (SVR) mortgage costs a collective £10bn a year, while the couple saved £5,000 a year by avoiding the SVR.
Trussle monitors everything, from the value of the home, to fees for an early exit and new deal, in order to identify when the time is right - usually towards the end of the term - and everything can be completed online for the remortgage.
The milestone comes as Trussle plans to ramp up the Mortgage Watch feature in 2018 as well as its campaigning to make switching a home loan easier
"It's big for us but even more for the industry. There's unnecessary pain and cost [switching manually]," said Trussle founder Ishaan Malhi, telling City A.M. he hopes mortgage switching will become as easy as switching current account or energy provider.
"It's the kind of thing if optimised that can maximise their [homeowners] monthly budget and their biggest financial asset," he said. "Free exchange of data can save consumers and the economy."
Trussle earlier this year called for a mortgage switch guarantee to be introduced, garnering interest from the Financial Conduct Authority and the Treasury as well as lenders. Rules on switching current accounts were introduced 2013 and for energy in 2015.
The startup, which is backed by Zoopla, Seedcamp and LocalGlobe, now expects many more customers to be coming to the point of being alerted to a better deal after two years in business.
And it will open the service to the country's 11m mortgage holders, not just those who have agreed their original deal through Trussle, as part of ambitions of becoming more than just an online mortgage broker,”said Malhi.
The move comes as financial services are on the verge of a landmark change to how they operate thanks to technology, with the implementation of Open Banking at the start of next year. Current accounts and small business banking are the initial focus with other areas expected to be addressed down the line, and technical standards for sharing data for the former laying the groundwork for the latter.
“While their experience marks a significant milestone for homeowners across the UK, it’s just another step towards our goal of completely transforming the switching process. With the improvements we're seeing in technology and the potential impact of Open Banking, there's no reason why remortgaging can't become instant, without the need for in-person appointments, lengthy phone calls, or endless paperwork,” said Malhi.