As we all know, banks and mortgage lenders recently lost quite a bit of money.
There’s a lot of smoke and mirrors being used at the moment to suggest they are posting healthy profits but it’s only because they are robbing Peter to pay Paul.
For many years mortgage intermediaries and brokers have been helping consumers find the best deals on the market. Naturally there have been those who exploit the system but any self respecting adviser should always have the clients best interests at heart.
Trawling through the thousands of mortgage offers available, often having access to exclusive products in the market and generally helping consumers understand the process and commitment.
This has and is changing.
The mortgage broker is being cut out of the loop.
The best deals are no longer available from brokers.
Lenders are cutting costs by offering better products direct to consumers. This way they can charge a slightly lower rate, make the offer seem more attractive and still save money by not paying anybody any commission.
eg: Mortgage via broker has arrangement fee of £999 and lender pays commission of £1200 – the lender is £201 down.
Direct mortgage has no arrangement fee but no commission is paid – the lender is even.
According to a recent report mortgages from brokers can cost on average £200 per month more when all the costs are added up because the best deals are now available direct.
So if mortgage advisers can’t offer the best deal but still wants to provide the best advice they have to try charging for telling c customer to go down the road and speak to a high street lender.
How many people will willingly pay £300 just to be told where to go for a walk, who to phone or where to go online?
Where does that leave the customer?
Without paying for advice people will be left to make their decision based on what’s on TV, the internet or the ever faithful and trustworthy high street banks & building societies. Great!