It's taken a while, but the mortgage industry has finally moved out of the inertia that was the result of the imposition of regulation. Now it is back to what it does best - designing and marketing the most innovative mortgage products in the world. But, if we are truthful, it has all been a bit of a struggle.
There was a very real fear a couple of years ago that with regulation, innovation would be stifled and firms would be left selling very similar products that conformed to the regulator’s demands. This happened to some extent as lenders switched from concentrating on products to worrying if their back office systems could cope with the regulator’s demands for record keeping, Key Facts Illustrations and instructions regarding treating customers fairly.
It was those lenders that had the task of dealing with legacy systems which faced the greatest challenge and it would be fair to say that some struggled to make them work. This diverted time and resources away from the areas that they do best – creating new products and markets. This caused a gap in the market, and as nature hates a vacuum, it didn’t take long for new players to jump with the latest technology in place.
Now slowly but surely we have seen things start to change to the point where a number of lenders are now venturing into new product areas that they had previously avoided. Buy to let, sub prime, light adverse, all have taken on a new lease of life as more products came to market with existing lenders trying new product routes.
And other changes are afoot also. Lenders that have always previously dealt through the packaging channel are starting to look at dealing direct with networks.
This is typified by GE Money launching their direct offering through Mortgage Intelligence, a complete change from their previous packaging route through I Group and First National. This move has been sparked by the trend towards securitising loan books. Large organisations such as Lehmans, GE Money, and, of course, Merrill Lynch are also very prominent in the buying of mortgages in the securitisation market.
This shows that the mortgage sector is firmly back in fashion. The involvement of these firms should help to ensure that the mortgage sector continues to grow and develop for the benefit of us all.
Sally Laker is managing director of Mortgage Intelligence.
The views expressed are those of the author and not those of the company he represents.IFAonline
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