July 9, 2013

John Phillips is financial services director at Kinleigh Folkard & Hayward


In a study of 1,000 homeowners and homebuyers last month by Which? 99.5% of responders were unable to work out the total cost of mortgage deals based on a borrowing of £100,000.

Which? did the test to demonstrate the spiralling cost of fees and emphasise that borrowers should not just be comparing mortgages by the headline rate alone.

The Council of Mortgage Lenders were quick to point out the limitations of the research as Which? asked consumers to rate the deals on offer only for cost over the period of the special deal.

However, all acknowledge the research raised an important issue about the limitations of using the Annual Percentage Rate to calculate cost.

It is a comprehensive report to make an important point – but not the one Which? has highlighted.

My conclusion from this report is that mortgage advice is more relevant than ever to people’s financial well being.

This research showed that even people who have mortgages struggle to understand the real cost of a deal.

You might ask why people do find this so hard but I believe the answer is straight forward.

Even if the nation’s numeracy is not the issue, practice (how many and how often does anyone change mortgages?) and busy lives mean that, understandably, most people are not interested or familiar with the pricing of mortgage products.

With an ever growing number of products and changing criteria, it’s not surprising in the wider world that consumers rely on advice.

This research also serves as an acute reminder to brokers that the service we provide is not only essential but also a weighty responsibility that people hand over to us when they ask us to help finance their properties.

Consumer research may seem an unlikely source of interemediary support but as custodians and guardians of client welfare it is a welcome reminder to the broker market of the importance of organisations like Which? to our own concerns.




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