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'Are banks killing the mortgage broker market forever?' blog discussion

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  • queen_of_string
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    I use a whole market broker as I am self employed and as well as my home, I have a rental property. Without him I would never have been able to get a mortgage or remortgage 2 yrs ago. Brokers will always have work with non standard customers and with more standard ones who dont want to do their own legwork.
    Eat food, not edible food-like items. Mostly plants.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    An initial part of a remedy is perhaps the one imposed by the Office of Fair Trading following its investigation via the Competition Commission into the doorstep lending market: a requirement that all participants in the market register their deals on a shared site set up for the purpose.

    A second step would be a requirement for credit reference agencies to provide quotation search data to the site and for lenders to provide a close approximation of their credit file related rules to the site for automated analysis to better illustrate the true range of deals available to the consumer. A close approximation because such rules can be complex, but an alternative would be to provide the search data to a lender's systems for them to provide a reply, that could be limited to the larger lenders only for cost reasons.

    This would reduce some of the potential competitive advantage from keeping deals away from the broker market by making it easier for consumers to compare direct deals. And would also provide a useful service for consumers who could more accurately examine their options in conjunction with a broker.

    In my view the whole of market wording, as used today, is fundamentally misleading.
  • MSE_Martin
    MSE_Martin Posts: 8,272 Money Saving Expert
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    edited 9 July 2010 at 3:29PM
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    payless wrote: »
    Didn't we raise this issue over 2 years ago...

    Yes and its noted in my blog.

    However there's been a change of scale

    Then it was a few direct sellers, and a few banks who had better deals outside of the intermediary market.

    Now 50% of deals are direct - a mammoth turn around.

    THe scale and risk factors at missing direct deals are different now in my view.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
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  • Wakey2008
    Wakey2008 Posts: 149 Forumite
    edited 9 July 2010 at 1:06PM
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    Martin,

    What your blog fails to highlight is the reasons why banks and building societies are shying away from using brokers. In this gloomy climate, what do you think the reasons are?

    I'm an adviser for a building society and previously worked in underwriting for a major bank so I can give you the story from this side of the proverbial fence but am interested in what your view is.
    I am a Mortgage Adviser and Freelance Journalist
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Conrad
    Conrad Posts: 33,137 Forumite
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    edited 9 July 2010 at 12:01PM
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    SOME OF YOU MISSING SOMETHING HERE;

    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.

    2) Millions of people need brokers for the more complex cases. Outsiders will never understand just how complex client situations can be - the beneficiary that is inheriting a property but already lives in, yet her sibling wants a cut, but our client has three sources of income, one of which is paid in euros - for example.

    3) I often send clients to direct lender deals, but without me they would not know how to 'place' thier complex case so I charge up front a big fee, and they get the best deal for them.

    Commision heads are dinos living in the past. Fee based, is the only sustainable model, and is the best option for those with complex needs. The likes of L&C arranging mortgages are the equivolent of B&Q dishing out building seminars!


    As I keep on saying, brokers who traditionaly just farm the straight forward clients have no future.

    A reduced number of brokers will always prosper as long as they have the mind set and tanacity to get the ultra complex cases through.

    That's it.
  • tripod2000
    tripod2000 Posts: 58 Forumite
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    We should have been a straight forward case. I thank the Gods I went with a mortgage broker. He has really earned both the fee payable on completion and only on completion and his commission from the bank which he out right told us about as a matter of trust.

    So far 5 and a half months since offer was accepted and the second mortgage company we hopefully have movement. My sanity is nigh on owed to that guy!
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    Conrad wrote: »
    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.
    These are the people I was refering to in post #2. With a little nudge in the right direction these people would be able to do that research much more productively.
  • payless
    payless Posts: 6,957 Forumite
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    MSE_Martin wrote: »
    Yes and its noted in my blog.

    However there's been a change of scale

    Then it was a few direct sellers, and a few banks who had better deals outside of the intermediary market.

    Now 50% of deals are direct - a mammoth turn around.

    THe scale and risk factors at missing direct deals are different now in my view.

    There's not been a mammoth turnaround , its just that its become more public knowledge .. 18-24 months ago was also a partilcular bad point, it got a bit better, then reversed again
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • payless
    payless Posts: 6,957 Forumite
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    Conrad wrote: »
    SOME OF YOU MISSING SOMETHING HERE;

    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.

    2) Millions of people need brokers for the more complex cases. Outsiders will never understand just how complex client situations can be - the beneficiary that is inheriting a property but already lives in, yet her sibling wants a cut, but our client has three sources of income, one of which is paid in euros - for example.

    3) I often send clients to direct lender deals, but without me they would not know how to 'place' thier complex case so I charge up front a big fee, and they get the best deal for them.

    Commision heads are dinos living in the past. Fee based, is the only sustainable model, and is the best option for those with complex needs. The likes of L&C arranging mortgages are the equivolent of B&Q dishing out building seminars!


    As I keep on saying, brokers who traditionaly just farm the straight forward clients have no future.

    A reduced number of brokers will always prosper as long as they have the mind set and tanacity to get the ultra complex cases through.

    That's it.
    I would agree that there is a place for brokers in complex cases... remember though in complex cases when a broker says fee , they usually mean "fee + commission"

    I do however feel that there is a place for average and high end clients.

    A lot of my clients are employed, most earn £50K plus , many £100K plus, some are employed in the finance industry with £1M+ incomes, yet the feedback I recieve is that they would rather have me source than have to compare deals themselves. These people want guidance and advice, but also want a good deal. Factory gate pricing seems the way forward... allow brokers to get access to all products ( afterall we pay regulatory fees) then charge an agreed fee if required.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • thursdaynext
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    So, banks offer you a cheaper deal than a broker does - and that's a bad thing? Did I miss something here?

    In my experience, mortgage brokers just type your details into their computer & tell you what's at the top of their list... Last time I wanted a mortgage I spent some time looking myself, then rang a broker & told them what I'd found and could they beat it (they couldn't). Nothing very complex about it...

    I don't hear anyone mourning the death of the insurance broker, so how is it different?
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