Should we stop focusing on a flaky delivery of ‘innovation’ and look at broadening our offering in existing sectors?
There is a constant pressure in this market to come up with the ‘next big thing’. There seems to be an obsession with innovation despite the fact that mortgage products tend to stay pretty constant.
True innovation is rare. Indeed, you can probably count on one hand the number of truly innovative products we have seen over the past couple of decades. In my book, innovation does not mean cutting prices, increasing loan-to-value or relaxing criteria.
Perhaps we should stop focusing so much on a flaky delivery of ‘innovation’ and instead look at broadening the offering we have within existing sectors.
Recent news that Nationwide Building Society is looking at launching an equity release product certainly fits that category.
Despite punching above its weight and growing its lending volumes, equity release is still very much a niche sector. To have a top-six lender – and a mutual to boot – move into this market alongside other new entrants such as L&G provides a real boost.
It may also be a sign that lenders in the top echelon are willing to look at more niche offerings.
Given the growing competition in the mainstream market, Nationwide is probably not the only larger player eyeing up other sectors, especially with the uncertainty around buy-to-let, until now the niche of choice.
History tends to tell us that, where the mutuals lead, others will follow. I suspect, in sectors as diverse as equity release, high LTV, bridging, commercial, light adverse and others, we are about to see burgeoning competition.
Pad Bamford is business development director at AmTrust International, Mortgage and Special Risks