Is technology set to replace human interaction in property investment?

According to Smart Property Investment’s Phil Tarrant: “It's an interesting relationship. There's a thing called channel conflict between brokers and banks where, often, banks like to have a direct relationship [with clients] but they also use the broker channel as well to generate volume.”

However, many are starting to ask the same question: For how long will mortgage brokers be relevant in the field of property investment? The past few years saw the rise of artificial intelligence and other remarkable innovations. Aussie Parramatta’s Ross Le Quesne, who continues to work as a property professional for more than a decade, admits that technology is definitely changing the landscape of the wealth-creation business.

“I noticed on one of my banking sites the other day before I'd even logged in, there was a pop-up [that says], ‘Do you want to chat to a home loan consultant right now?’ ” he shared.

Despite these changes, the mortgage broker believes that the “human touch” will always have a place in the property market, especially considering the added complexity brought by new guidelines from administrative bodies such as the Australian Prudential Regulation Authority (APRA). Mortgage brokers, as well as other property professionals, will remain an integral part of the vast property investment landscape for years to come.

A growing industry

The APRA has recently altered guidelines on lending and interest rates in order to avoid having investment books grow too fast. The changes implemented not only widened the disparity between interest-only rate and principal interest rate but also added more variables to consider when securing finance, making it more complex for property investors.

Ross said: “Before, you had fixed and variable rates. Now, we've got fixed interest-only, fixed principal and interest, variable interest-only, variable principal and interest, investment interest-only—there's so many variables.”

“A rate is no longer a rate, and a product is no longer a product the way that the loans are assessed.

“There's so much more complexity and the added layer of complexities is just going to drive more and more people to mortgage brokers,” he added.

According to him, as compliance gets more complex, the share business to brokers and other property professionals gets better. The mortgage industry has grown up over the last decade and, although it’s most definitely going to be challenging for both investors and professionals, it will only continue to develop as time goes by.

According to Phil: “There is the [National Consumer Credit Protection Act], which is the code for brokers [to] operate within [a set of guidelines] and be licensed.”

“For a period of time, when it was a fledgling, new industry, there were some rogue operators out there that probably weren't behaving in the best way, but the mortgage industry today… it's a professional operation outfit now and [it’s] adding considerable value to consumers,” the property investor added.

While technology will certainly augment the processes in property investment, especially financial services, human interaction will remain. In fact, a lot of young investors nowadays prefer to have people involved in the process instead of completely relying on technology. After all, property investment is not a cheap venture, and investors want as much guidance and assurance as they could get.

Phil said: “It's so important to have that personal connectivity when taking on mortgage debt … A lot of the heavy lifting might be able to get done by machines, but into the future, that relationship is still key.”

“[Investors] want the confidence of an expert guiding them… [because], sometimes, too much information creates confusion, [and] there's a lot of information online,” Ross added.

Technology is definitely going to provide a lot of benefits for investors, but the education that one gets from a professional is what will ultimately add value to his portfolio.

Tune in to Ross Le Quesne’s episode on The Smart Property Investment Show to know more about the habits he sees among the best investors in today’s market as well as how growth in the investment industry has been enhanced by the mortgage industry in the last few years.