New Google service could commoditize mortgagesBy Andrew Rickard | November 26 2015 11:43AM
Google Compare allows consumers in certain jurisdictions to compare car insurance, travel insurance, credit cards, and savings accounts. It added mortgages to the list of Google Compare products earlier this week.
On Nov. 23, Google announced that people in California can now use its Google Compare service to search for mortgages. The company says it plans to expand the program to other areas in the future.
According to Google, this new service will give people searching for mortgages real-time, "apples-to-apples" comparisons of rate quotes from a variety of lenders in as little as a minute. Google Compare for mortgages will also allow consumers to submit ratings, reviews, and enter information such as their estimated loan amount or home value in order to receive appropriate quotes; after submitting their data, mortgage shoppers will be able to go directly to the lender's web site and apply directly online or over the phone.
This summer, Robert McLister, the editor of CanadianMortgageTrends.com, wrote an article outlining what might happen if Google Compare for mortgages were to come to this country. He suggested that the rates available on Google for well-qualified borrowers would probably be lower than the posted rates offered by most large financial institutions. This would drive mortgage shoppers to Google’s site, even if it was only to obtain a second opinion on what their lender or broker had offered them.
"Clearly this wouldn’t be positive for industry margins," writes McLister. "With more consumers easily comparing mortgage rates on a trustworthy website, the interest rate would take on heightened importance. Perceived differentiation among mortgage providers would diminish because if the provider is on a Google website they must be reputable.' Such a trend would make life unpleasant for higher-cost producers and those without a strong non-rate-related value proposition."