Young people happy to take out their mortgage with a 'challenger' bank
Changing attitudes towards online financial services and a distrust of major banks mean that more than half of millennials would now consider taking out a mortgage with a 'challenger' bank.
Challenger banks have grown in popularity in recent years. Many of these have only a small number of High Street branches and some only offer online services.
Young people prepared to use technology to get a mortgage
New research has found that 51% of millennials - people reaching young adulthood around the year 2000 - would consider taking out a mortgage with a challenger bank.
The EDM Mortgage survey revealed that just 8% would not consider a mortgage with a challenger bank such as digital-only services Atom, Starling and Tandem.
Younger people are also more likely to trust technology to help them get a home loan. More than two in five (41%) said that they would be willing to use an app to buy a mortgage, while three in five (61%) of all millennials said it would be desirable if their mortgage lender were to provide an app.
A quarter of millennials (25%) say they would be “happy” or “very happy” to take out a mortgage online using a robo-advice service or deal with an automated adviser that is based on artificial intelligence. However, more than one in three (36%) say they would not consider using an 'automated' advisor.
Of those millennials willing to use an app, 59% said they would for reasons of speed. Other reasons cited include being used to using apps (50%), the ability to arrange a mortgage at any time (41%), getting a better deal (37%), greater accuracy (15%) and the reduced risk of fraud (5%).
Three in four (75%) of those who responded to the EDM survey said that they would be unwilling to use an app say they think something as important as a mortgage should be explained face-to-face.
Joe Pepper, managing director at EDM, comments: “Millennials are the most tech-savvy generation ever. While our research shows many of them still prefer to negotiate something as important as a mortgage face-to-face, the fact remains that technology is an inherent part of their lives.
"The digital approach of the challenger banks will increasingly appeal to them going forward and traditional lenders will have to become more digital themselves if they are to compete with the challenger banks in the longer term.”