By Ryan Johnson
The founder of a mortgage startup that promised to give borrowers access to the complete home loan application process has shared his findings, providing insights on the relationship between technology, homebuyers, and mortgage brokers.
In 2018, mortgage broker and serial entrepreneur Clint Howen (pictured above) launched a daring experiment: to determine how willing borrowers were to complete a loan application without broker interaction.
A crowd-fundraising campaign was followed by a national public relations push, emphasising that clients could “broker their own loan”.
The way this worked was by consumers filling out a questionnaire that matches them with suitable loans based on the input. Unlike mortgage comparison sites, the platform was unbiased as it didn’t rank mortgage products based on advertising spend.
Importantly, while consumers could “be their own broker” and secure their mortgage in a couple of minutes without any human interaction, they also had access to the advice of real mortgage brokers through the platform.
In a short amount of time, the startup, called Hero Broker, generated over $2 billion in loan applications. At the time, it caused quite a stir.
However, Howen insisted the platform was never meant to put brokers out of business but give consumers ‘good, unbiased access to loan products’.
“I think ‘experiment’ is a great way to phrase it, because it was an experiment and that is how we treated it,” said Howen six years later. “We are brokers ourselves after all.”
Examining a pool of 1,000 applications from borrowers who had already selected a loan, key insights emerged:
“This last point was different than most expected,” said Howen.
Essentially, even when the borrower was matched with the correct loan, trusting the results required a professional review.
Despite efforts to automate aspects of the loan proposal process, Horan said the insights gathered reinforced the importance of mortgage brokers.
“I honestly believe brokers should see this as a huge win in support of the brokers,” Howen said.
“The test, if clients when presented with suitable options and incentives like cashbacks, would proceed with a loan application without a broker’s assistance, resulted in a hard ‘no’.”
Overall, the findings highlighted the significant emotional factors at play in the mortgage space.
“Distinct from car loans, credit cards, or Buy Now Pay Later (BNPL) services, mortgages and the family home are a really big deal for people and as human beings we fundamentally want to talk to people about big ticket items,” Howen said.
As for Hero Broker, the startup was renamed Gunn and operates as a mortgage brokerage.
“It’s bootstrapped and going strong,” said Howen.
Howen said the experiment has matured and helped formed the foundation of Wealthx – a personal finance management app for brokers launched in 2022.
“We are building a future for lenders and brokers to take advantage of open banking data in partnership with each other,” he said. “What an exciting time to be in fintech.”
For Howen, the fundamental human emotions revealed in the insights, reinforced his view that brokers won’t be automated out of the job.
However, it also cemented his position that brokers need to be on the front foot when it comes to new technology like automation and artificial intelligence.
“The future I see is a substantial automation of broker tasks, allowing brokers to dedicate more time to the crux of client scenarios and interactions,” Howen said.
“Rather than being replaced, I see the transformation has the potential to catapult individual brokers to levels of productivity that were once only achievable with larger teams.”
Looking into the future, Howen said a simple question consistently comes to the forefront: As a consumer, do I prefer A) a traditional broker, B) an AI home loan tool (replacing a broker), or C) an AI-powered broker?
“In my eyes, C always wins, but there might be a battle for A and B.”