Joust, the latest disrupter to hit the home loan market, has launched a live auction platform – providing consumers, in essence, with a reverse eBay experience for mortgages.
The home loan contest - which allows customers to secure low interest rates by having lenders bidding for their business - has seen home loans valued at more than $45 million being put up for live auction in just a few weeks. Launched on 1 June in South Australia, Joust will enter the Victorian market in October followed by a full national roll-out by January 2017. “The platform - which involves lenders bidding for the loans in real time - allows customers to watch as lenders drive down each others' rates within the chosen time frame," commented Joust managing director, Mark Bevan.
After pitching the product for 18 months, he found converts chiefly among the challenger brands as it gave them an opportunity to target specific customer segments.
As such, Bevan has signed up seven second-tier lenders, including Bank SA, Adelaide Bank, Australian Unity, People’s Choice Credit Union, Bank of Queensland, Beyond Bank and Gateway Credit Union. And, he has plans to push that number to 20 by the time Joust rolls out nationally, which given the discussions and high level of interest received to date, he is confident in predicting. "The challenger brands will always find it hard to compete digitally with the big banks," he argued, adding that their resources were stretched.
“Our mortgage origination platform costs the challengers very little and yet they get highly-qualified leads that allow them to target specific client niches,” Bevan said. “They can see the geography, the demographic, the loan-to-value ratio, the credit rating band - these are all things that we provide.” As he sees it, the platform is a real alternative to the use of mortgage brokers for the customer-owned and smaller regional banks - which are struggling to achieve reach.
'Chunk out of the value chain'
Bevan is convinced that digitalisation of the mortgage process will completely change the customer experience, forcing more and more brokers into the advice and financial planning area. “The old style broker business that takes a chunk out of the value chain for straightforward home loans will find it harder to justify this as technology improves,” he added. His goal is to bring a new competitive edge to the financial sector, by bringing the lenders to the consumer - and putting consumers firmly back in the driving seat. Additionally, he has been in talks with the big four banks but so far has been unable to land any of them as clients. “While impressed with the concept, our platform represents a threat to their back book so it's unlikely the major banks will jump on board," he said.
Joust charges 20 basis point for mortgage origination and charges the lender’s a fee for using the software. That charge is based on each deal introduced to them. Unlike Flongel - which also offers mortgage auctions via a platform - Joust offers no advice and does not make recommendations. “We just create the platform and the direct link with the technology for the banks to bid in a live and dynamic environment so each lender can see each other's bids."
Elizabeth Fry, firstname.lastname@example.org
June 21, 2016