However, looking beyond some of the initial headlines, maybe the most interesting point is that Habito has come to market with a product it is distributing and manufacturing — broadening this model beyond buy to let where it already has a product and proposition live.
Could this be the start of a bigger shift in the way mortgages are underwritten and sold in the future?
Industry parallels
It is not altogether uncommon to see distributors moving up the value chain. In general insurance, Managing General Agents (MGAs) are estimated to control about 10 per cent of the UK insurance market.
MGAs are essential distribution organisations or insurance brokers, acting as wholesale insurance intermediaries who have the authority to underwrite, accept placements, bind cover and in certain instances even manage claims on behalf of insurers.
In some ways this has revolutionised the sector by ensuring those closest to customers can match them with the best financial products.
There are parallels between the two sectors and there is certainly the potential for the mortgage sector to implement a similar model where intermediaries play a much more involved role in underwriting and placing business.
Involving distributors in lender processes
In the past there have been predictions of the demise or possible disintermediation of mortgages and advisers.
However, in my view, consumer demand for advice and advisers remains strong and recent events may have only increased this need.
For instance, Legal & General Mortgage Club’s SmartrCriteria and SmartrFit tools have recorded a significant uptick in the numbers of searches for products suited to furloughed borrowers and those who have missed repayments.
Maybe then, it is not advisers who are at risk?
Some have argued that product innovation simply has not gone far enough to reflect the needs of borrowers and there may be an opportunity for those closest to customers to drive the change many feel is needed.
And if others follow in Habito’s footsteps then we could see a shift in not only the types of products on offer, but also who is funding them.
All-in-one distributors could transform the way our market operates, potentially ushering in a new wave of ‘lenders’, the likes of which are populated with pension and insurance funds eager to invest in the UKs booming housing market.
An example has now been set and we can expect others to be having conversations about developing their own all-in-one propositions. This could be a space to watch closely.
