Brokers missed out on 135,500 borrowers switching a product with their existing lender on an execution-only basis in Q3, UK Finance’s Q3 Product Transfer statistics have found.
Internal product switching represented £43.5bn of mortgage borrowing in the third quarter, up 12.8% year-on-year.
Of this total, £25.4bn was on an advised basis and £18.1bn on an execution-only basis.
Andrew Montlake, managing director of Coreco, said: “That the number of non-advised product transfers continues to rise is a worrying consumer trend.
“By switching to another product offered by the same lender without advice, borrowers risk moving not just to a product that isn’t competitive but one that is inappropriate.
“Sadly, this trend looks set to continue, as lenders become ever more assertive in their desire to keep hold of their existing customers.
“While it may save them a bit of time and hassle in the short-term, in the medium-term borrowers could find themselves with a loan that’s fundamentally out of sync with their circumstances.
“Many borrowers who transfer to another product risk missing out on an opportunity to reduce their mortgage terms, restructure their loan or move onto an offset product that could save them thousands of pounds in interest.
“If product transfers are advised, and are shown to be suitable, that’s all well and fine. But if they are not, there are clear risks for the consumer.”
Some 311,400 homeowners completed product switches in Q3, a year-on-year increase of 7.5%.
Of these, 175,900 were on an advised basis.
David Copland, director of mortgage services at TMA, added: “Today’s statistics highlight that borrowers continue to take advantage of the array of solutions on offer to transfer to a product that best suits their needs.
“However, it is disconcerting to see that 135,500 of product transfers were on an execution-only basis last quarter.
“There is a danger here that customers could end up with the wrong product for their circumstances, and this could lead to severe financial consequences for them in the future.
“What’s more is that some may be better off remortgaging – something which they may not realise without getting guidance from an adviser.
“It is a broker’s duty to be checking in with clients regularly and reviewing their circumstances throughout their mortgage term.
“Technology has gone a long way in helping brokers to do this in an efficient and hassle-free way.
“Clubs and networks continue to invest in the tools brokers need in order to keep on top of their client portfolios and better support customers with the right solutions for them – whether that’s achieved via a remortgage or a product transfer.”