The lending community is at last re-awakening to the fact that intermediary distribution is a valuable service, with the realisation also dawning on the remaining minority of borrowers not currently using a broker.
Last week, the Association of Mortgage Intermediaries (AMI) published its ‘Value of Mortgage Advice’ report.
It came at a time when the tide started to change significantly in the disparity of pricing through differing distribution channels.
Indeed, last week, Nationwide made it clear that it thinks dual pricing “is a phase and it will not last indefinitely”.
Members reported that exclusive deals were starting to return to the market, including last Friday’s announcement that the West Bromwich is launching a range of mainstream and buy-to-let products to intermediary distribution.
All these signs are very encouraging for our industry, and AMI has been calling for a level playing field to be maintained over the long-term.
The reason the ‘dual pricing’ activity has just been a phase which is now fizzling out is a simple one: customers want to arrange their mortgages with advice, and with the service and impartiality supplied by a mortgage intermediary.
CML figures for the first three months of this year show a 10% swing towards intermediated distribution, albeit a smaller market.
Over 80% of first time buyers and 79% of remortgagers used a broker. The FSA’s own figures show that only 40% of direct to lender transactions are sold with advice, whereas 93% of customers using a broker received advice; when the economy starts to tighten more borrowers look for impartiality and advice.
The ‘Value of Mortgage Advice’ clearly shows that those borrowers who do not use a broker limit themselves to a tiny proportion of the market place.
Nine out of ten borrowers look at no more than three lenders when seeking out a mortgage for themselves, and only half of them look no further than their principal banking relationship.
The level of customer service available directly compared to going through an intermediary is another reason why borrowers prefer to use a broker.
Overall more than half of borrowers who arranged their mortgage through a broker felt that they were kept informed of the progress of the mortgage applications. Of those taking out a mortgage direct, this figure drops to only a third.
AMI is working hard with the regulator, Treasury and lender trade bodies to try to find a solution to the mortgage funding famine that is causing the current unusual market conditions. We are calling on these bodies to give their backing to the role of advice in the mortgage market at these difficult times.
Richard Farr is the director of AMI
The views expressed in this article are those of its author and do not necessarily represent those of the company he represents, IFAonline or any other Incisive Media affiliated organisation.IFAonline
Senior Managers Regime
Interest rate outlook unchaged
FCA made demands last week
'Unsung' part of FSCS work