Head to Head: Tandem Bank vs Unmortgage

As a child of the 70’s and early 80’s, Top Trumps relieved the boredom during those endless car journeys and rainy weekends and for me are reminiscent of a golden age before the advent of the ZX Spectrum, which changed childhoods for ever!

Starting from this issue, every month I will be provide an extremely subjective view of some comparable news stories that have caught my eye over the last 30 days and score them in true Top Trump style – I hope you enjoy.

First up is Tandem Bank’s news that they are launching a new mortgage product that will involve customers in the ‘design phase’. The headline is striking and hints at an extremely innovative approach from a challenger bank and we should always applaud greater engagement with customers.

However, Open Banking has been around for a while now and this alone doesn’t score highly for innovation or newsworthiness, whilst asking customers for their input may be a great message to underline a ‘customer centric approach’, but will it lead to groundbreaking products? I have my doubts.

Paraphrasing Steve Jobs “figure out what customers want before they do” may have relevance here and I fear there will be no ‘Game Changer’ that emerges from this, plus it’s a shame that they haven’t asked brokers too, bearing in mind they write 70%+ of all mortgages in the UK currently.

I will love to be proved wrong as we need more challengers to offer more choice than the big 4, let’s see what is finally developed, we are all waiting…

Our Top Trump challenger to Tandem Bank is Unmortgage and the announcement of a new scheme that allows First Time Buyers to own their first home, but without a mortgage. First of all, any new initiative to get more people onto the housing ladder must be welcomed, although I am in agreement with the industry legend that is Terry Pritchard, as it’s far too complicated and will only help very few, if any at all. Therefore, it’s unlikely to be the answer to the wider problem.

The scheme is also dependent on the properties that Unmortgage have been able to acquire, which is also a major limiting factor. I’m aware of many similar initiatives that are seeking to provide an alternative to Shared Ownership and I can understand why they have sought funding by investors, rather than current mortgage providers. Few lenders are willing to back such ‘small scale’ initiatives due to the issues surrounding lending policy, IT, legals and also short term needs around achieving lending targets and I get it, I’ve been there.

Finally, I note that on their website that they are seeking FCA authorisation and again from my past experience I’d be interested in their policy and procedures around what happens if the ‘borrower’ gets into arrears. Also, to get a conventional mortgage, proof of affordability will be needed and rent isn’t always allowed to help provide this proof.

I hope we see more firms trying to provide solutions and there are many people in this industry that could provide guidance and counsel for such start ups, so that eventually some can get off the ground.