Of the 120 surveyed respondents, 78 per cent (94 readers) votes ‘yes’ when asked whether Australian lenders need to develop more innovative products, while 22 per cent (26 readers) did not believe more innovative products were necessary.
The question has divided opinion among industry leaders.
AFG executive chairman Kevin Matthews told Mortgage Business that while the mortgage distribution space is as competitive as he has ever seen, new products are not coming to market.
“I just don’t think there is anything left they can offer in terms of product features that would attract the borrower or make their deal look any different than anyone else’s, to be perfectly honest,” Mr Matthews said, adding that Australia’s mortgage market is the most complicated in the world.
“Our products are extremely complex compared to other developed countries.
“There are not many other countries that have offset options and all of the features that we provide on our mortgages.”
However, FBAA chief executive Peter White disagrees, telling Mortgage Business that lenders must innovate on product functionality.
“I don’t agree the innovation limit has been reached, since there are many lessons we can learn from overseas markets and also our own experiences in Australia,” Mr White said.
“For example, in the US they have 30-year fixed interest rates, as such, which you can break without cost,” he said.
“I’m not saying we should do this, but it is an example of an innovative product we don’t have here.”
Mr White singled out lender's mortgage insurance (LMI) as an area where lenders could be more innovative.
“One area of innovation I do strongly believe in is the portability of LMI insurance,” he said.
A product with this function would increase the fluidity of the refinance sector, he added.