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Last Updated: Monday, 23 January 2006, 01:34 GMT
Lenders bid in mortgage auctions
A keyboard
Lenders will be bidding for mortgage business
A website has been launched that pits lenders against one another in an auction to secure mortgage business.

The site bundles together borrowers with similar profiles, with the aim of giving them bulk appeal to lenders.

Up to 14 lenders then bid for the bundle, with the one offering the lowest rates securing the business.

But an expert warns that the number of lenders bidding is small and borrowers may be better shopping around.

Real-time auction

The site sorts borrowers into bundles according to the type of mortgage they want, how much they want to borrow, the size of the loan as a percentage of property value and credit rating.

Lenders, in a real-time auction, then compete to secure the business.

The idea is that 50 people bundled together should get a better deal than they will do on their own
John Gibson,

"The idea is that 50 people bundled together should get a better deal than they will do on their own... Lenders benefit from lower acquisition costs, certainty of demand and ease of administration," John Gibson, chief executive of, said.

But with less than 10% of authorised UK mortgage lenders agreeing to bid on the site, some experts question its usefulness.

"It is an interesting idea, but with so few lenders, I have to question how competitive the deals on offer will be," Michael Brill, director of independent financial advice firm Baronworth, told BBC News.

In response, Mr Gibson said that consumers could use the site to compare the mortgage deals on offer throughout the market and from their own bank or building society.

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