Browsing for a mortgage a click away
Tracy LeMay
Financial Post
You don't have to look too far into the future to see the day when shopping online for a mortgage rivals the traditional pounding-the-pavement method.
The variety of ways to access mortgage lenders via the Internet is growing rapidly. You can apply through the Web sites of individual financial institutions, personal finance sites (www.imoney.com, for instance) and, as of yesterday, through E*Trade Canada, a Web site that allows investors to trade Canadian and U.S. stocks, options and Canadian mutual funds online.
E*Trade says it has hooked up with Basis100 Inc. to provide a service whereby consumers can qualify and apply online for mortgages through E*Trade's Web site (www.canada.etrade.com).
Basis100 provides e-commerce services to businesses and focuses on creating mortgage, consumer credit and fixed-income electronic marketplaces.
Via the E*Trade site, consumers can apply to nine lenders, such as Bank of Montreal and Canada Imperial Bank of Commerce.
"This is one of first things you've seen from us that broadens our services to our constituents past investment research and execution services," says Colleen Moorehead, president of E*Trade Canada. "Our customers do things online -- they manage their finances online -- and it's just logical they would see the services Basis100 offers ... to be helpful for them."
The Basis100 software incorporates the qualification criteria from participating lenders. This means consumers applying online can be electronically pre-qualified.
After the loan application is submitted over the Internet, the financial institution analyzes it and responds, usually by telephone, with an approval or another proposal. At this point, the rate and/or terms can be further negotiated.
Less that 1% of Canadian mortgage business is conducted online, says Gary Bartholomew, chairman and chief executive of Basis100.
But a sign that proportion will increase is the fact that 35% of mortgage buyers go on the Net looking for rate information, he says.
Once more companies consumers feel comfortable with offer online products, consumers will be more inclined to follow the process to completion on the Net, says Mr. Bartholomew.
He notes that analysts predict that by 2005, up to 30% of mortgage business will be conducted over the Net. That translates to roughly $25-billion worth of Internet mortgages in Canada. In the U.S. online mortgage origination will account for 9.6% of the market by 2003, or about $91.2-billion (US), says Forrester Research Inc. That compares with about 1.5%, or $18.7-billion (US), in 1999.
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