Challenger bank Tandem has announced the impending launch of a new “crowd-designed” mortgage product for UK consumers. In a release, Tandem said it plans to offer competitive mortgages to first-time buyers and “property ladder hopefuls” based on a range of financial data points.
Tandem said it wants consumers to be part of the design process by sharing their personal “must-haves” for a mortgage. Interested individuals may join a group of co-creators. Tandem will use the information garnered to ensure the new lending product “services a real consumer need.” The new mortgage product will then be tested with a small group of customers by the end of 2019 before a full UK launch in 2020, according to the company. The new mortgage product will benefit from Open Banking as it seeks a “fresh approach” to identifying good borrowers via a new credit scoring model. Tandem expects to be able to offer mortgages to some people who may have been denied by traditional lenders.
Ricky Knox, Tandem Bank CEO, stated:
“We’re once again turning to our community to shape a new financial product, this time a crowd-designed mortgage. Many people feel like they’re priced out of the housing market or don’t have the credit record to get a favorable mortgage. We plan to address that.”
Knox added that “the mortgage sector in the UK is primed for a shake-up.”
Tandem believes that the current system of credit bureau assessment has punished individuals who have poor credit scores. The bank states that people working on a freelance basis or as part of the gig economy are particularly vulnerable to rejection and unfavorable rates.
Tandem said it is also looking to offer a range of different solutions to assist consumers wanting to “get on the property ladder, including Help to Buy and Shared Ownership.”
Nick Bennett, COO at Tandem Bank, said they are building a mortgage proposition that reflects the changes that are happening in the sector whilst challenging some of the established ways of doing things.
“We’re looking at new and intelligent ways of assessing whether a potential customer is creditworthy, as well as ensuring our mortgage offering meets the needs of today’s consumers rather than taking a traditional approach. This is why we’re keen to have as much input as possible from the public on ways in which we can improve the current market offering”