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Great service is the key to retaining clients

Brokers must have been spooked by the latest statistics from the Council of Mortgage Lenders. It seems that the level of remortgaging now stands at a five-year low.

Figures for September show that borrowers switching to new deals accounted for just 30% of the market by value – the lowest figure since August 2001. More terrifying still, the figure is down from 42%, year on year.

This is not just a monthly blip. Over the third quarter of this year the trend has been apparent, with remortgaging accounting for only 31% of the market compared with 39% in the same period last year.

The CML claims the reason for this dramatic shift is lenders’ retention strategies – and that is a nightmare for brokers who make their money persuading borrowers to move their business from one lender to another.

From a consumer’s point of view it’s good to know that lenders are at last taking the trouble to find ways of satisfying customers over the longer term.

But it would be a mistake to assume they are keeping all these customers sweet simply by offering them long-term loans.

Although long-term fixed rates such as the new 10-year deal from Leeds are becoming more popular, they are not the reason for the lack of remortgaging activity.

CML statistics show that there has been a fall in the number of people taking out fixed rate deals.

Great customer service is always going to be a big draw for customers. Few of us will ditch a company that is looking after us well, even if a cheaper deal is dangled carrot-like in front of our noses.

On the other hand, we might think about moving our money and our custom from a bank that starts to treat us like fools.

First Direct’s current account customers have the highest customer satisfaction rating of any UK bank at 90%. Many of these customers have offset mortgages linked to their accounts.

But I would think twice about my banking provision if I was suddenly informed that I needed to keep 1,500 in my current account or pay a 10 monthly fee.

First Direct insists that most of its customers will not face the fee – including those who have another product with the firm such as a savings account or loan.

But I wouldn’t be surprised if some of its customers took umbrage at this heavy-handed tactic and thought twice about retaining First Direct’s services.

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