Tesco & Virgin could enter the mortgage market over the next 12 months to offer customers more choice in the ailing competitive financial services industry. It is thought the appetite to lend competitively is returning and this will encourage more mortgage lending and therefore more property sales.
In our last article we discussed the Bank of China offering mortgages in the UK, well this appears to have sparked a debate in the industry about competition in the mortgage market. Kensington Mortgages were a leading adverse lender when times were good, but also one of the first to scarper when things turned sour. Now it seems they are preparing for a comeback.
Waiting in the wings we also have a newly formed company called CheckMate Mortgages founded by Stephen Knight former Chairman of GMAC RFC UK. Checkmate is preparing to 'reflect post-credit crunch learnings' and provide innovative products and an automated Point of Sale Offer service to mortgage advisers. Thus ensuring faster mortgage offers and less bureaucracy.
In addition, Virgin and Tesco are potential entrants to the mortgage market. It had been discussed before the market changed that Tesco were planning to extend their interests further in the financial services industry. The big firm already holds connections within the industry by offering various insurance services, so it wouldn't be such a big step for them to diversify their product range and offer mortgages.
Our View:
It is good to hear that the likes of Kensington Mortgages are looking to return to lending again. However, what we
need most are innovative products and processes. It's exciting to hear of
new firms like CheckMate mortgages waiting in the wings for funding aiming to bring something different to the table. If Virgin or Tesco decided to offer mortgage products then we are definitely set for a competition shake up in the financial services industry. The immense presence that these firms would bring in would make it impossible for current market leaders such as HSBC, LLoyds and Abbey to ignore them.
