Mr Steel, former CBA chief digital officer, has taken the lead as chief executive and founder of the new platform, which offers ongoing automated assessments of users’ mortgages and remote broker advice.
After 16 years with the big four bank, he told Mortgage Business that he had a “big itch”, watching customers struggle with the complexity of home loans.
“The whole time, I could see that banks, they put people in homes, which is wonderful, but they don’t really focus on helping those customers save on their home loan year after year. That’s how they make money, by excess margin there,” Mr Steel said.
“So, I thought there’s a great opportunity, around what’s happening in the mortgage broking industry, but also to bring tech innovation to what’s a pretty challenging space over the years for customers, managing their home loan.”
True Savings has aggregated data on the home loan rates available in the market and what customers are being charged, offering users a comparison of products and an automated calculation of how much they could potentially be saving with a different provider.
The platform will also track customers’ rates over time, aiming to ensure they aren’t stuck paying more than necessary, with automated alerts when there are more competitive rates.
However, True does not offer a wholly digital experience, after the firm quickly found customers wanted human interaction.
“I thought it was going to be the case that it could be pure digital, no people. It’s not the case,” Mr Steel said.
“People want help from other people, particularly around a home loan.”
Mortgage brokers are available to True’s customers via video calls, with the platform including a whiteboard interface they can use to explain concepts and to share notes.
There are five brokers working with True currently, but Mr Steel has signalled plans to hire more and to grow the business over the next six months.
“We’ll be raising the flag over the next few months as we scale up. I think of it as a two-sided platform – as we can increase customer demand, we certainly would welcome more and more people who maybe don’t enjoy having to hunt for leads all the time,” he said.
“And our platform enables brokers to enjoy working at home and to serve customers virtually.”
The brokerage is aggregating under Connective.
$3.6 billion in excess interest paid each year
Alongside the launch, True has released a report surveying 52,000 households across Australia against the lowest rates available in the market.
It has found that Australians pay $3.6 billion more than necessary in interest each year.
Mr Steel called the result “staggering”.
“Your bank could be charging you an uncompetitive rate as soon as six months into the loan, and it’s even worse for loans over two years old,” he said.
“If you have not checked your current rate this year, you are almost certainly paying too much.”
Sydney households are paying on average more than $9,000 excess interest each year, while Melbourne is coughing up an excess of $7,000 each year.
The top 10 suburbs for excess interest were mostly captured in Sydney, although a couple of Melbourne locations made the list.
In the Sydney suburb of Lane Cove, for example, households collectively could be paying over $23.8 million more in interest each year than they need to. True reported the typical mortgage rate in Lane Cove is more than 1 per cent above the market rate.
In the Melbourne suburb of Cranbourne meanwhile, owners could be an average of $7,000 a year better off with their interest rates.
Lendi CEO David Hyman recently flagged the issue of “loyalty tax” to a parliamentary committee, where banks will offer better deals to new borrowers while leaving existing customers to cop higher fees.
The ACCC had recommended that lenders should regularly prompt customers whose loans are more than three years old to review their rate and consider switching product in its final Home Loan Price Inquiry report.
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Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.