Rate competition offers opportunity for advice


July 26, 2012

Bob Hunt is chief executive of Paradigm Mortgage Services


The number of mortgage products currently available to borrowers may not be as numerous as in the heady days prior to the global financial crisis but neither is the offering as meagre as it was at the market’s nadir in 2009.


Mortgage Brain reported that the choice of home loans increased by 87% in 2011 and the availability of new products has maintained a steady rate into this year.


Factor in a spate of rate cuts as lenders go head-to-head to have the most sought after 5-year fixed rate and the further adjustments expected as the Government’s Funding for Lending scheme kicks into gear and brokers could suddenly find their services back in even greater demand as borrowers try to navigate their way through a much more competitive mortgage marketplace.


It’s not just selecting the right product that brokers can help with either. Amid the flurry of rate cuts, changes and rising mortgage availability is the reality that approval levels hit a three-year low in June according to the British Bankers’ Association.


While this can be partly explained by the bad weather and the number of public holidays, it is also somewhat symptomatic of lenders not simply waving through the same percentage of applications they once did.


This isn’t necessarily a bad thing and it is for the greater good that banks have distanced themselves from the easy credit attitudes of the past but this is clearly another area where intermediaries can earn their corn.


No-one should ever put unsuitable individuals forward for finance but experienced brokers are likely to know or establish quickly what sort of deals will fit with which lender, the most suitable proposition and, as important, how to present a case.


Alongside this submission and product expertise the most obvious advantage brokers have is their ability to select deals from the whole of the market.


No matter how keenly lenders such as HSBC price their direct-only deals there will always be a healthy percentage of applicants who will still want to compare this with offerings elsewhere.


After all headline rates are not the be all and end all to a mortgage and in an age where you can’t turn on the TV or read a paper without being annoyed by comparison sites’ latest cartoon creations, consumers are increasingly aware of this.


It was suggested by some that the existence of such websites would sound the death knell for mortgage brokers but the impact hasn’t been as drastic as expected.


Instead savvy consumers are using the sites to get a general idea before visiting a professional for confirmation and assistance.


The proportion of the mortgage market accounted for by brokers may never return to the percentages witnessed before the credit crunch but there will always be demand for professional, independent home loan guidance, particularly while the economic outlook remains so uncertain.


For mortgage brokers who have weathered the recessionary storms, endless rafts of legislation and various other slings and arrows it makes little sense to throw the towel in now when things perhaps appear to be about to turn the corner…in my opinion there is a lot more than a little life left in our particular distribution channel.



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