On-line home loans- are we ready for it?
The ability to comparison shop for features and prices makes the Internet a natural channel for credit products. With the latest statistics showing that more than forty per cent of Australians are already on-line, the availability of credit over the Internet has the potential to fundamentally change the market dynamics for these products.
Realising such potential, the Commonwealth Bank has just released a fully on-line home loan through its subsidiary, www.homepath.com.au. The main differentiators of this product from its conventional counterparts are that the entire process can be completed over the Internet, a decision given within 24 hours, and is free from any continuing fees. As an added introductory sweetener, the product will also be free of set-up costs.
Are Australians ready to purchase their home loans over the Internet? The recent report of the low number of settled mortgage applications by E-loan would suggest that we are not- at least for the moment. We do, however, utilise the Internet extensively as a research tool. Information sites such as BankChoice, that group together interest rates and product features make it easier for consumers to compare individual offerings and quotes, are proving extremely popular.
Analysts do believe that once borrowers get comfortable on-line, and lenders get smarter about their prospects, mortgage products sold over the Internet could constitute up to 25 per cent of the entire Australian home loan market by 2004.