Over the past 12 months, a number of supermarkets, including Tesco and Sainsbury, has increased the financial services they offer. However, Justine Tomlinson, marketing director at Mortgage Next, argued the entrance, or increased drive of supermarkets into the mortgage market could hinder the growth of the market and dent consumer confidence.
She said: “There are a number of threats to the industry. One of these is how financial services are perceived by consumers. Supermarkets could try to expand their offerings in the financial sector, working off of the back of their standing among consumers.”
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However, Andy Young, chief executive at The Business Mortgage Company, said:
“Increased competition is usually a good thing and I doubt supermarkets entering the mortgage market would put experienced lenders out of business. Supermarkets have powerful brands but there is little chance that they would be able to offer extremely competitive deals that other lenders cannot match. Selling mortgages is quite different from selling produce, with people tending to be very cautious when borrowing large sums of money. They will still want to deal with established financial experts.
“I’d be surprised if supermarket mortgages had a significant impact on the buy-to-let market as this is a highly specialised field which involves a multitude of sophisticated product offerings and changing criteria to meet demand.”
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