Although there is always a buzz around lenders and advisers that venture to be different, the industry still underdelivers on innovation. The innovation driven by the smaller building societies is not taken up at scale by lenders with bigger balance sheets.
Whilst there is no singular reason for this, regulation of the sector is an identifiable roadblock to innovation, particularly for larger businesses. So when smaller mortgage lenders innovate it is rare that we see the sort of scale that might be achieved in other parts of financial services that are a bit more encouraging to innovation. More should be done to encourage innovation in the mortgage market by the regulator to help to provide better outcomes for underserved borrowers.
This lack of innovation could also be attributed to the slow pace of technological progression in the sector. As one of the more divisive topics, technology and its place in the industry are right at the centre of ongoing debate.
Mortgage lending is a traditional process that takes a very personal, hands-on approach. There are certainly discussions to be had about the limits to how much technology can and should be used when it comes to lending responsibly. It is therefore no surprise that disagreement is common on the importance of the use of technology within the lending space.
This does not mean the appetite for change isn’t there. For a large majority of lenders technology can be – and in quite a lot of cases, already is, – a welcome enabler. Once again, with a consensus, will come swifter change. If key players in the industry remain hesitant, overarching technological change will continue to be a slow burner.
Our market is more competitive and more complex than ever
Whilst innovation and new technology may not be flourishing this does not mean the lending industry is stagnant. In fact, quite the opposite.
The market itself is becoming more diverse and increasingly competitive on rates from bridging to second charge loans. This is a positive for the sector and the borrowers we support, however, it also means more specialist knowledge is needed to navigate the various offerings different lenders have to offer. All the while the market is moving increasingly in favour of the intermediaries that have invested time getting to know the specialist sector.
Building for the future
What was encouraging to hear was the enthusiasm for self-builds and a clear support for small-scale developers to build more.
This is an issue that LendInvest has focused on in a report launched this week. Our ‘Starting Small to Build More Homes’ report calls on the government to revise its treatment of small and medium sized property investment and development companies, and to recognise the positive contribution they make to solving the UK’s housing crisis.
As four out of five property SMEs have disappeared since the last housing boom, it was good to hear the Senate rally around and agree that industry support for these small scale developers is all the more crucial.