Halifax denies wanting to kill off remortgaging

Halifax has denied that its reason for offering a retention fee is to kill off the remortgaging market.

Alan Cleary, managing director of edeus, is warning brokers not to be fooled by the offer of a short-term fix but instead to consider the longer term implications.

He says: “Lenders in the prime sector can’t make money given the dynamics of today’s prime business. A typical prime deal at 0.25% above the base rate will have a life of 2.6 years, down from seven years in the early 1990s. Therefore, the lender will make 0.25% x 2.5, which equals 0.625%.

“After paying the broker 0.35%, the cost of processing at 0.15% and the cost of servicing at around 0.25% plus any other associated costs there’s no money in it.”

But Nigel Stockton, managing director of HBOS Mortgage Intermediaries, says: “We don’t think the remortgage market will disappear and this certainly won’t be the end of it. We don’t expect everyone to stay with us. All we’re doing is giving consumers and brokers a choice.”

And industry pundit Brian Pitt says: “Halifax’s offering will have to be pretty impressive to stop brokers from searching the market, which is what they are obliged to do in the interests of treating customers fairly.”