Here are 7 quick reasons why it’s so hard to create innovative mortgage products or deviate from traditional mortgage models:
1. Regulation - the mortgage industry is heavily regulated, making it difficult to introduce new products or upgrade the
existing ones.
2. Risk - mortgages are a huge financial commitment that forces both borrowers and lenders to carefully manage risk.
3. Limited scope - innovation in the industry is limited. For example, the basic structure of a loan to purchase a home, secured by the property itself, has remained almost unchanged in the last century.
4. Customer preferences - people are hesitant to try new mortgage products, especially if they are unfamiliar with them or if they perceive them as riskier.
5. Competition - the industry is highly competitive. It’s difficult for new entrants to gain a foothold in the market.
6. Tradition - the mortgage market often favors traditional, government-backed mortgage products, and so it’s harder for other mortgage products to try and compete.
7. Subsidies - some governments provide subsidies to encourage certain types of mortgages, making them more attractive to borrowers than other innovative products.
It's hard, yes, but that doesn't make it impossible.
We at Contigo Capital are committed to building innovative home loan products that make homeownership more affordable for more people.
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