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

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  • ifacompare
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    There can be no doubt that Mortgage lenders are cutting IFAs out of the market quite simply because they no longer want to pay a fee for introducing customers.

    It has been suggested that some lenders don't want the new business and therefore are putting barriers to market infront of IFAs to stop them introducing any.

    For some customers who understand the market this might not be too much of an issue. Some customers are comfortable discussing mortgages with their lender directly and don't require advice

    However, in my experience there are a lot of customers who have been forced to talk to their mortgage lender directly instead of dealing with them through their IFA and this is resulting in some customers making poor financial choices and having to pay the price for them

    There is no substitute for sound independent financial advice offered through an IFA, it can make a huge difference to the average person.

    If lenders continue to under-estimate the importance of dealing with IFAs and continue to offer direct mortgage deals to customers that IFAs do not have access to, there can only be one result. Customers who end up in financial difficulty
  • Wakey2008
    Wakey2008 Posts: 149 Forumite
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    ifacompare wrote: »
    If lenders continue to under-estimate the importance of dealing with IFAs and continue to offer direct mortgage deals to customers that IFAs do not have access to, there can only be one result. Customers who end up in financial difficulty

    In my experience, more customers end up being in financial difficulty after going through a broker then direct because too many of them were fiddled through by brokers willing to doctor their application.

    It's no surprise that those lenders who relied most heavily on broked cases (Northern Rock, Kensington etc) are also the ones that have the highest levels of accounts in arrears and the highest levels of repossessions.

    Brokers have themselves to blame.
    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.
  • Wh05apk
    Wh05apk Posts: 2,938 Forumite
    First Post First Anniversary Combo Breaker
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    Wakey2008 wrote: »
    In my experience, more customers end up being in financial difficulty after going through a broker then direct because too many of them were fiddled through by brokers willing to doctor their application.

    It's no surprise that those lenders who relied most heavily on broked cases (Northern Rock, Kensington etc) are also the ones that have the highest levels of accounts in arrears and the highest levels of repossessions.

    Brokers have themselves to blame.

    Sorry but you are talking absolute tosh, if you have evidence of applications being "doctored" you have a legal duty under whistleblowing to report it.

    You obviously have a vested interest in consumers not using brokers, but your examples of lenders with high levels of arrears are very poor:
    Northern Rock - a lender which had a very low credit threshold and high loan to values?
    Kensington - a sub prime lender? of course they would have higher arrears that was their business area, their rates reflected the assumed higher risk.

    In years gone by there were poor brokers on both sides of the fence, on the whole I believe this has improved dramatically, in the current market where lenders have been restricting supply through pricing, how can it be in the consumers interest to just go their their bank and assume they are getting a good deal, a lender pricing to stem demand can be 1/2-1% higher, on a £100k mortgage that's a £1000 a year! by going to the wrong lender.

    I suspect a lot of your's and the publics concern is that it is seen brokers are earning a fortune? again, since leading a high street lender and going self employed I am probably on 2/3 of my previous salary, with no pension/holiday pay etc, but I am happy, I know I am doing a good job for my clients - most of my buisiness is referrals -can you say that?
    I am a mortgage adviser.
    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.
  • ianmccaul
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    Another ploy by Banks to do two things
    1. Squeeze out independent mortgage advisers who provide a service for a fee to give the "best all round" recommendation from the providers they use, which need not necesarily be all the market.
    2. Offer a direct deal to the public often with large fees or tie ins or both that Mr Average will not spot and in many cases will be left with "want a mortgage? then sign here. Unfortunately a lot will just sign rather than read and understand all the contract and its ramifications.
    The end result of all this is that the Banks will have forced independent advice to the wall which then leaves them open to screw the public with small print that they have signed because they desperately want to "buy that house".
    Cynical you might say, but I believe very true.
    Insurance Companies tried the same with Brokers over the last decade and the reality of that is if you ask a broker for a quote he gives advice, ask an insurer they will give you only what you ask for and unless you know what is available how do you really know if you've got the best for you
  • Wakey2008
    Wakey2008 Posts: 149 Forumite
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    Wh05apk wrote: »
    Sorry but you are talking absolute tosh, if you have evidence of applications being "doctored" you have a legal duty under whistleblowing to report it.

    You obviously have a vested interest in consumers not using brokers, but your examples of lenders with high levels of arrears are very poor:
    Northern Rock - a lender which had a very low credit threshold and high loan to values?
    Kensington - a sub prime lender? of course they would have higher arrears that was their business area, their rates reflected the assumed higher risk.

    In years gone by there were poor brokers on both sides of the fence, on the whole I believe this has improved dramatically, in the current market where lenders have been restricting supply through pricing, how can it be in the consumers interest to just go their their bank and assume they are getting a good deal, a lender pricing to stem demand can be 1/2-1% higher, on a £100k mortgage that's a £1000 a year! by going to the wrong lender.

    I suspect a lot of your's and the publics concern is that it is seen brokers are earning a fortune? again, since leading a high street lender and going self employed I am probably on 2/3 of my previous salary, with no pension/holiday pay etc, but I am happy, I know I am doing a good job for my clients - most of my buisiness is referrals -can you say that?

    Yes I can say that I do the best for my customers, especially when at least three out of five of them come to me saying they were screwed by a broker when they took their last mortgage.

    Brokers are middle men that are more often than not driven by the size of the proc fee rather than giving correct advice, hence the higher levels of poor quality mortgages passed by them to lenders.

    Maybe you are one of the good ones but if that's the case your part of a minority and what's more you know it but don't want to admit it.

    Lenders didn't stop using brokers for nothing you know. During the start of the credit crunch they assessed the quality, risk and cost of brokered cases and decided it wasn't in their interest to use them anymore.
    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.
  • Wakey2008
    Wakey2008 Posts: 149 Forumite
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    ianmccaul wrote: »
    Another ploy by Banks to do two things
    1. Squeeze out independent mortgage advisers who provide a service for a fee to give the "best all round" recommendation from the providers they use, which need not necesarily be all the market.
    2. Offer a direct deal to the public often with large fees or tie ins or both that Mr Average will not spot and in many cases will be left with "want a mortgage? then sign here. Unfortunately a lot will just sign rather than read and understand all the contract and its ramifications.
    The end result of all this is that the Banks will have forced independent advice to the wall which then leaves them open to screw the public with small print that they have signed because they desperately want to "buy that house".
    Cynical you might say, but I believe very true.
    Insurance Companies tried the same with Brokers over the last decade and the reality of that is if you ask a broker for a quote he gives advice, ask an insurer they will give you only what you ask for and unless you know what is available how do you really know if you've got the best for you

    See previous comment about proc fees if you think brokers give the best all round advice. Most just recommend what suits them and their pocket.

    In terms of screwing the public comment. This is tosh. Banks and Building societies are subject to strict disclosure rules and are regularly checked. It is against regulation to recommend mortgages that are not suitable and no adviser worth his salt would say "just take that one". They run the risk of being sacked and never working in the industry again.

    In regard to the last comment, all mortgage lenders are obliged to offer you two levels of service (non-advised and advised), this is the same as every broker is required to do.

    To the good brokers out there, do you want someone to blame? Blame bad brokers who wrote poor business. They put you in this position.
    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.
  • Wh05apk
    Wh05apk Posts: 2,938 Forumite
    First Post First Anniversary Combo Breaker
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    Wakey2008 wrote: »
    Yes I can say that I do the best for my customers, especially when at least three out of five of them come to me saying they were screwed by a broker when they took their last mortgage.

    Brokers are middle men that are more often than not driven by the size of the proc fee rather than giving correct advice, hence the higher levels of poor quality mortgages passed by them to lenders.

    Maybe you are one of the good ones but if that's the case your part of a minority and what's more you know it but don't want to admit it.

    Lenders didn't stop using brokers for nothing you know. During the start of the credit crunch they assessed the quality, risk and cost of brokered cases and decided it wasn't in their interest to use them anymore.

    Don't know who you work for, but how can you say you do the best for your clients? you do the best for them from your master's products, lenders price according to supply of funds/admin constraints, so at certain times any lender could easily be 1/2 - 1% higher, are you doing the best for your clients selling them an uncompetitive deal?

    I think you need to get upto date, in the past there may have been good and bad brokers/sellers on both sides, but those days are gone, yes I can make £500 on a typical mortgage, but there is no way I, nor most brokers would risk their livelihood by submitting anything even slightly dodgy, it just is not worth it.

    Lenders on the whole get the quality of applications according to their criteria, there is no difference on either side, if they set the bar low, yes they will get the business nobody else wants, and as brokers we will use them where we can't place the case elsewhere, so yes maybe the broker input will be lower as we will place the good stuff at a better rate elsewhere, if you work for them, you will submit all your business good and bad, so perhaps your's could be a better quality.
    I am a mortgage adviser.
    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.
  • Wakey2008
    Wakey2008 Posts: 149 Forumite
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    Wh05apk wrote: »
    Don't know who you work for, but how can you say you do the best for your clients? you do the best for them from your master's products, lenders price according to supply of funds/admin constraints, so at certain times any lender could easily be 1/2 - 1% higher, are you doing the best for your clients selling them an uncompetitive deal?

    I think you need to get upto date, in the past there may have been good and bad brokers/sellers on both sides, but those days are gone, yes I can make £500 on a typical mortgage, but there is no way I, nor most brokers would risk their livelihood by submitting anything even slightly dodgy, it just is not worth it.

    Lenders on the whole get the quality of applications according to their criteria, there is no difference on either side, if they set the bar low, yes they will get the business nobody else wants, and as brokers we will use them where we can't place the case elsewhere, so yes maybe the broker input will be lower as we will place the good stuff at a better rate elsewhere, if you work for them, you will submit all your business good and bad, so perhaps your's could be a better quality.

    Not at all. I only submit what is well within policy. I don't just submit anything and nor should any other adviser. There is strict rules about recommending anything. Regulation states that if you don't have a product that suits the client's needs you tell them so and do not just recommend the nearest thing to it.

    I've no problems with turning cases away and at the moment probably send more people off packing than you write mortgages for.

    As for times changing, I don't know what world you live in but I deal with people in the here and now who have been given the run around by brokers. Only last week I had to deal with a customer direct who came to me because he'd been to a broker first and discovered the broker was lying to him about what products were available to him.

    I'm not saying that the demise of the broker market is a good thing, far from it. What I am saying is that there are still some terrible brokers out there and they are the ones you should be venting your frustrations at as they are the ones that have caused this problem.
    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.
  • Wh05apk
    Wh05apk Posts: 2,938 Forumite
    First Post First Anniversary Combo Breaker
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    Wakey2008 wrote: »
    Not at all. I only submit what is well within policy. I don't just submit anything and nor should any other adviser. There is strict rules about recommending anything. Regulation states that if you don't have a product that suits the client's needs you tell them so and do not just recommend the nearest thing to it.

    This is not what I have said, if for example your 2 year fixed is 3.99% and the customer is looking for a 2 year fixed, then do you turn them away because you know another lender has a 2 year fixed at 3.19%?

    I've no problems with turning cases away and at the moment probably send more people off packing than you write mortgages for.

    As for times changing, I don't know what world you live in but I deal with people in the here and now who have been given the run around by brokers. Only last week I had to deal with a customer direct who came to me because he'd been to a broker first and discovered the broker was lying to him about what products were available to him.

    So the broker lied and lost the sale, why would they do that?

    I'm not saying that the demise of the broker market is a good thing, far from it. What I am saying is that there are still some terrible brokers out there and they are the ones you should be venting your frustrations at as they are the ones that have caused this problem.

    This problem, is because lenders have limited funds, and generally underworked expensive in-branch advisers who they are trying to keep busy.
    I am a mortgage adviser.
    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.
  • MattAtAbacus
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    Some banks have never offered mortgage deals to brokers, for example HSBC; however they used to be the exception rather than the rule. Nowadays, most of the mortgage best-buys are only available if you apply direct to a lender ... which doesn't really seem very fair to the consumer in the long term. If you are looking for a mortgage, you will probably start with researching best-buy tables ... however there are many more questions you may need to ask beyond finding the top rate:
    • if you are told by the provider of that particular product that you cannot borrow, what do you do? Why were you declined? Where do you go next?
    • how much will you be able to borrow as a maximum?
    • which is better... a low rate with a high arrangement fee from one lender or a higher rate with a low arrangement fee from another?
    • are current account mortgages a good idea?
    These are the sorts of questions that a good mortgage broker will be able to answer... and they are precisely the sorts of questions that bank advisers may not be able to answer as they can only advise on their own products.

    Removing brokers from the advice process can only damage the industry as it will become ever more difficult to compare mortgage products as we will become more receptive to banks with large advertising budgets... and not necessarily assessing products with a critical eye.

    If you are financial savvy enough, you may be able to find the most appropriate mortgage deal for your particular circumstances... however, probably the best way to ensure this at the moment is to ask your broker to conduct research based on intermediary AND direct-to-lender products ... just don't pay too much for the advice.
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