View more on these topics

Clued up clients make better buyers

The findings of Mortgages Direct’s recent customer survey were depressing to many in the industry but in a way, inevitable. Some findings beggar belief. For example, one in four people thought a tracker mortgage tracked their salary increases and a staggering 31% thought it tracked inflation.

It is easy to be dismissive of the findings of such surveys but we do this at our peril. The message is clear – the vast majority of customers do not understand the basics about the mortgage they have bought. It’s also a fact that as the UK has one of the most competitive mortgage markets in Europe, customers have never had so much choice of products and lenders. The bewildering choice is one of the reasons so many use the services of intermediaries.

The Key Facts Illustration should supply information to consumers so they can compare and understand the finer details of products. But on the evidence of this survey there is precious little of this new understanding about.

Cynics say the sheer volume of information provided in KFIs results in only the most committed customers reading documents the thickness of telephone directories.

Never before has the customer had access to so much information. And you’d think the money columns in the newspapers would be improving the understanding of financial products. Someone must be reading them. But it does not seem to be your average mortgage customer.

Perhaps another problem is that our products are too complex. Simplicity can benefit some customers but too simplified a product can lead to dumbing down. Besides, different customers have differing levels of understanding.

So can brokers play a part in the education process? Yes, but only to a limited extent. Many argue they could end up spending vast amounts of time explaining products and features. But the reality is those clients who want to learn will be the ones who listen.

Customers with a better understanding of the products purchased will be a benefit not only to themselves but to the industry as a whole. This should be a long-term objective of the industry, working with the Financial Services Authority. Why? Because consumers with more understanding will deliver easier sales and fewer complaints.

Are all these aspirations for better understanding just pipedreams? I hope not, as 20% of those surveyed by Mortgages Direct thought FSA stood for Funds Savings Account. A telling example of how much work there is to do.

Recommended

Britannia launches 2-year fixed rate mortgage

Britannia is launching a new two-year fixed rate mortgage on October 28, offering a rate of 4.29% up to 95% LTV which is a drop of 20 basis points as the previous rate was 4.49%.The initial rate on Britannias two-year discount tracker will also drop on Friday October 28, to 4.35%. The product will track […]

Moody assigns SQ2 primary rating to HML

Homeloan Management, the provider of outsourced mortgage administration services, has been assigned an SQ2 primary rating by Moodys Investor Services for Servicer Quality. HML also gained an A3.EDF score for financial stability.The Moodys SQ rating analyses the quality of a servicer with specific regard to the securitisation of loan portfolios.Paul Fenn, head of business development […]

Bristol & West and the ABC launch buy-to-let solution for muslims

Bristol & West and ABC International Bank plc have launched a buy-to-let mortgage for the UK’s two million Muslims. This is the latest in a range of home finance products offered by the two banks, designed specifically to comply with Islamic law (Shariah).While the product’s structure differs from conventional interest based mortgages to ensure compliance […]

Pink Announces 6th 1000 Index Survey Winner

Pink has announced the winner of its 6th Pink 1000 Index survey. Ronald Burke of Midas Mortgage Associates based in Gillingham has been independently selected to receive a satellite navigation system for taking part in Pinks 6th Pink 1000 Index survey.Burke says: “I am delighted to have been selected as the winner of the satellite […]

Newsletter

News and expert analysis straight to your inbox

Sign up