Online mortgage auction launched in UK
23 January 2006 | 8892 views | 0
An online mortgage service has been launched in the UK which aims to reduce the cost of borrowing by pitching lenders against each other to compete for business.
The mortgagebundles.com Web site is described as an "eBay for mortgages".
The service bundles together borrowers with similar profiles. Lenders then bid on each group. The lender that offers the cheapest deal wins the auction, although individual borrowers within the 'bundle' may turn down the deal.
At launch, around 14 mortgage lenders will participate in the service - including Nationwide Buidling Society - representing approximately 50% of the UK's annual home loan lending.
After an auction, borrowers in a bundle are invited via e-mail to apply for a mortgage from the winning lender. If they decide to take up the offer, they then complete a full application form online that is sent electronically to the lender by mortgagebundles.com.
The site's model of 'bundling' consumers with similar risk and need profiles was designed by the company founders and is based on patent-pending technology implemented by software firm Arjuna Technologies. The company says this is the first time that this profiling approach has been used in retail financial services in the UK.
Robert Cole, technical director at mortgagebundles.com, says: "The current way consumers buy mortgages is time-consuming, antiquated and the market has long been crying out for innovative technology that puts the consumer in the driving seat.
"It has taken us just over a year to get the 'bundles' service fully operational and we are now confident that it will provide what the market needs right now; cheaper mortgage deals for consumers and increased business for lenders, all delivered conveniently and easily."