Research commissioned by GMAC-RFC, the UKs 10th largest lender, into why people choose to use an intermediary for their sub-prime mortgages reveals that the needs of a sub-prime customer are broadly the same as those of borrowers in the mainstream category.
This also applied to their motivations for seeking impartial advice. Over half, 54% of those surveyed had decided to use a broker for their mortgage and the most popular reason, 16%, was because they believed they would get a better deal.
Another popular reason was knowing the broker personally, which was 11% showing trust is a big factor. For one in ten people the motivation was simply that it was easier or more convenient for them whereas equal numbers, 10% felt they needed the advice of an expert and believed that a broker would give them the best guidance.
Brokers considering sales techniques should be aware that one in ten gave their business to a broker after being directly approached and that a further 9% felt real customer loyalty after dealing with their broker previously. Interestingly the research also highlighted the importance of a personal recommendation, 9% felt this was far more influential than an advert, only 1%, or a link to an estate agent, 4%.
Jeff Knight, head of marketing services at GMAC-RFC, says: This research clearly shows that sub-prime borrowers are no different to mainstream ones, in terms of their socio-economic backgrounds and financial motivations. They too need the help of intermediaries so intermediaries need to embrace this market, not shy away from it. Besides, with GMAC-RFC sub-prime business is just as straight forward as mainstream. Therefore a better understanding of why people choose to use a broker and a clear insight into the perception of brokers by their customers is vital.