Consumers hop off merry-go-round deals

Thomas Reeh, chief executive at Blackandwhite.co.uk says the two-year discount product is losing its appeal for consumers and brokers.

He says offset and base rate trackers are on the increase as consumers are looking for alternatives to two-year discount sting in the tail deals.

Reeh says: “Consumers are getting tired of the two-year discount merry-go-round. The churn and burn model is not working for anyone but lenders, and switching lenders every two years appeals to customers about as much as going to the dentist.

“It stands to reason that if brokers sell longer term solutions they should be remunerated accordingly. Many brokers do not like these products because their models are based on a two-year churn.”

He adds: “The rates of broker remuneration on two-year discount products are not sustainable and the intermediary industry has been its own worst enemy. So if a better balance is available, why wouldn’t the lender share some of the margin with the introducing broker.”

A spokesman for Money Partners says: “Everyone predicted discount products were going take off three months ago but they never did. Short-term fixed rate are the product of choice for consumers. People like the financial stability of fixed rates. They are moving away from discounts and towards fixes because of the product’s transparency and simplicity.”