1 in 2 Brits comfortable mortgage borrowing through an online-only bank
With Britain’s biggest banks shutting doors on over 300 branches in 2021, new research from NerdWallet has revealed that over half (54%) of Brits are comfortable with mortgage borrowing and applying for a mortgage online or via an app, without any human interaction or speaking to an advisor.
This figure rises to 58% amongst 25 to 34-year-olds, and higher still amongst 35 to 44-year-olds, with over two-thirds (68%) claiming they are comfortable using digital means to acquire a mortgage: the highest of any age group. This is even more significant when considering that 77% of the UK’s first-time buyers are mortgage borrowing between the ages of 25 to 44, according to the latest ONS statistics*, and the average age of a first-time buyer is 34 years old.
Surprisingly, over a quarter (27%) of those aged 45 to 64, and two in five (41%) of those aged 65+, said they would be comfortable taking out a mortgage online, showing that it is not just younger adults who are growing in confidence when it comes to using digital mortgage and banking services, but the older generation too.
The research suggests that this is part of a much wider trend, as the ‘digitisation’ of the high street continues and people move increasingly towards online services. Three in five (60%) Brits say they would now consider a bank with no physical branches, and 40% feel prepared to have a digital-only bank as their one and only provider. Almost a quarter (23%) said they would want both a digital and traditional bank with brick-and-mortar branches.
Although the research found that more than one in four (28%) were influenced to select a bank because of convenient access to a branch, over a third (38%) claimed they selected a bank based on convenient access online and almost a quarter (24%) were influenced by the convenience offered through the bank’s app.
“The shift to digital banking is very apparent and this trend is undeniably a contributing factor in bank branch closures. There is also an expectation as everything becomes more digital, for banks and other service providers to evolve to meet the modern needs of the public as well,” suggests Denise Ko Genovese, a Senior Personal Finance Expert at NerdWallet.
“24 hour and remote access, immediate transactions, ongoing budget tracking, and potentially quicker mortgage applications are just a few benefits online banking can provide, but we are in a time of transition and there is clearly still a role for physical branches in the banking landscape.”
With a recent report by the Bank of Scotland suggesting that a significant number of younger adults do not understand how a mortgage works, Ko Genovese believes that online banking could play an important role in improving this situation.
“A large percentage of younger adults are already comfortable applying for a mortgage online, but there is still more work for lenders to do. If banks can use their websites and apps to make more information and advice available while smoothing out the application process, this can go some way to closing the mortgage knowledge gap for current and future generations, so that securing a mortgage online becomes second nature.”
Article by NerdWallet. To view the full survey results, visit: www.nerdwallet.com/uk/current-accounts/online-banking-uk-survey