Newly-established tech firm Habito has launched what it claims is the world’s first digital mortgage adviser as it looks to plug the mortgage advice gap.
Habito, which launched back in April, has unveiled an algorithm-based mortgage adviser which seeks the best deal for clients in just 10 minutes, without the need for a human broker.
The new system works by matching the elements of a customer’s financial life with hundreds of real-time mortgage rates to calculate an indicative monthly payment.
Daniel Hegarty, chief executive and founder of Habito, said the mortgage robo-adviser was built in response to the FCA’s Financial Advice Market Review Report, which called for more accessible financial advice for British consumers.
Speaking to FTAdviser, Mr Hegarty said the system uses a “complex decision tree”, partly because the financial services regulation is so complex.
Currently clients only have to speak to a broker in order to accept the advice, but Mr Hegarty said the service will be developed after a few months so clients do not have to speak to a broker.
“We would not be comfortable to take their hands off the wheel just yet; that is always the danger with tech – you want to disrupt everything - but rushing into things is the way you trip over your own feet.”
But he said advisers should not feel threatened by the new offering.
“We want advisers to do what they are good at, which is to deal with complicated customers,” he said, adding the Digital Mortgage Adviser provides tools to take away the manual work for advisers.
The start-up firm analysed hundreds of advice interviews in order to understand what formed the basis of informative advice.
This helped build the foundations of the new system, which has an online “chat-like” interface and provides an unbiased, conversational experience, without the need to pay for advice.
The Digital Mortgage Adviser also has four mortgage brokers working behind the scenes, who clients can request to speak to online or on the phone.
“Finding the right mortgage product in the UK is like finding a needle in a haystack,” Mr Hegarty said, adding people are “crying out” for some innovation in an “outdated and overwhelming” mortgage market.
“I would say there is a wide variation in the quality of mortgage advice in the market, and we remove the hazard of humans having complex incentive structures or making mistakes and having bad days.”
Habito plans to roll out additional interactive features later this year, such as remortgage alerts, which will optimise the mortgage application process for consumers.
Dave Penny, managing director of Invest Southwest, said: “There is no doubt that there is an advice gap and a need for greater availability, including for mortgages, and inevitably technology will be used as one means of filling that gap.