Nine in 10 borrowers don't understand mortgages
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Nine out of 10 people planning to take out a mortgage in the next 12 months don’t completely understand the difference between the main types of mortgage, a First Direct survey reveals.
Only 8% of respondents say they completely understood the difference between the types of mortgage on offer and 11% say they didn’t understand at all.
The survey also highlighted that only 26% of people who already have a mortgage feel they completely understand the difference.
Richard Tolchard, senior mortgage product manager at first direct says: “This highlights a worrying trend. It’s really important that people do their research into which is the best mortgage product for them, taking into consideration their stage in life and current financial circumstances.
“They should always try to compare like for like and bear in mind that fees can play a large part in how a mortgage stacks up against the competition.”
The lender surveyed 2003 adults from a nationally representative sample between August 24 and August 31.
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Readers' comments (4)
Danny Lovey | 14 Sep 2010 12:53 pm
This confirms what we know and only goes to show how the FSA should be promoting the benefits of advice
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Ray Boulger | 14 Sep 2010 1:09 pm
It is very kind of first direct to publish research with highlights an excellent reason for people to use a good independent mortgage broker.
Recent CML stats showed that two thirds of customers who buy direct from a lender do so on an information only basis and indeed first direct is one of the many lenders which does not offer advice.
This means that most of the 90% of people planning to take out a mortgage in the next year who admit to not understanding the main types of mortgage, including all of first direct's customers (unless they have obtained advice elsewhere), will be none the wiser if they don't talk to a broker.
Furthermore I doubt even those lenders which do ofer advice explain robustly to propective customers the pros and cons of the products they don't offer, in order to facilitate comparison with those they do.
So please first direct spend more of your marketing budget on surveys to promote brokers!
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Anonymous | 14 Sep 2010 4:32 pm
And where did the 76% of existing mortgage holders who do not understand mortgages get their advice from? It does not seem that anybody is doing a particularly good job of explaining the options and what people are getting.
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Jeff Royle | 15 Sep 2010 1:26 am
Just goes to prove that no matter what the FSA say or do people in general just want a mortgage. Producing KFI's the size of War and Peace just adds to the confusion, I was against them from the start. All people want to know is how much can they borrow, the rate options and any penalties if they break.
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