Will Britons ever be moved to take out a home loan online?

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The Independent Online

Just one in 20 borrowers take out a mortgage online, according to recent industry estimates - a figure that has barely shifted over the past few years as consumers continue to prefer old-fashioned face-to-face and telephone deals.

"We're not where we thought we would be on internet mortgages," admits Ray Boulger of broker John Charcol. "It's not like the unsecured personal loans market, which is now largely driven by the web.

"There are a lot more factors [such as fees, redemption clauses and different types of home loan] to consider, and people like support in making a decision."

This chimes with research from Market Harborough and Coventry building societies, suggesting that most online applications are carried out by experienced remortgagers who apply for relatively small amounts in relation to their property value.

More and more mortgage lenders are allowing people to apply online, but the Halifax, the UK's biggest home loan provider, is not among them.

"People like to pick and mix [the way in] which they organise their finances," says Paul Fincham of the Halifax. "They may check their bank balance online or phone to renew their insurance, but when it comes to mortgages, demand is still strong for face-to-face advice."

And increasingly, for those consumers seeking an online deal, there is no longer much difference between the interest rates on offer in branches and those available on the internet.

"This is because the problems caused by [cheaper] online deals were outweighing the benefits," says Mr Boulger, adding that customers without internet access felt they were being discriminated against.

Subdued consumer sentiment can also be found away from the mainstream lenders.

Mortgagebundles.com - a website that brings potential borrowers together online to achieve cheap "bulk buy" rates from lenders - reports a slow take-up since its launch in January. Only 302 individuals or couples have received formal mortgage offers through the site, and founder John Gibson estimates that around 200 have gone through to completion.

A handful of lenders (mainly those without branches) do still flag up cheap rates online. For example, Direct Line launches a new two-year internet-only tracker mortgage at around 4.5 per cent this Friday. This will be cheaper than the same deal arranged by telephone.

While the appeal of online applications remains muted, the web's popularity as a research tool grows apace. The price-comparison website moneysupermarket.com records over half a million visitors every month to its mortgage-comparison page.

For those who go on to apply online, convenience is a big plus.

Caroline and Paul Warneck, from Rugby, recently applied for a three-year stepped discount deal with Market Harborough starting at 3.54 per cent - and carried out the entire process online. "We are no strangers to the internet," says Caroline. "We have run our own business accounts online for the past six years as well as organising our travel, banking, insurance and holidays this way."

The Warnecks got the same loan rate as they would have done through the society's branches, but price was not the couple's motivation. "My husband has his own business, I work as a special needs teacher and we have two boys aged 12 and seven. We don't have time to trawl round bank branches."

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