In this month’s Lending Zone we look at supermarkets and what their ambitions to enter the mortgage market could mean. Food and clothing retailer Marks & Spencer recently announced its ambition to set up a bank, albeit one backed by direct-only UK giant HSBC.
It joins Tesco, which is awaiting its banking licence to begin hawking its wares to consumers looking to buy a home.
The M&S announcement led to parodies of how it could market the products to borrowers. Will adverts feature soft-focus footage of a moist, key-facts illustration while a female voiceover breathlessly describes the products’ terms and conditions?
Hopefully not. But as Ian Foottit, a partner in financial strategy at Deloitte, says in our cover feature, the financial services industry has plenty to learn from supermarket retailers especially when it comes to customer service.
Lack of competition continues to blight the market
The supermarkets will not necessarily dominate the market but they could give it a welcome shake-up and hopefully add a dose of competition.
Lack of competition continues to blight the market. Stephen Johnson, Shawbrook Bank’s managing director of commercial lending, posed the following question on Mortgage Strategy Online last week – could alternative lenders fill the gap left by high street lenders?
As one of those alternative lenders, Johnson argued the sector could, and that it was purely a matter of communication to alert consumers and businesses of the opportunities.
Others argue that the government should be looking to broaden the ways in which mortgage finance is provided.
For example, in the 1970s many key workers were able to get 100% mortgages as a result of help from local authorities and some in the industry are calling for a return to this system.
As well as helping borrowers to get back on the housing ladder, it would also boost the number of finance providers in the market. And with the current constraints on finance, that can only be welcomed. “