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Direct mortgage deals make up 50% of the market

Direct only mortgage deals account for 53.7% of the mortgage market, compared to 2007 when they accounted for only 22%, a new banking report shows.

Independent financial research company Defaqto has launched a new banking report which highlights the growth in direct only mortgage products.

In April 2007 there were 590 direct only deals, compared to 1,400 in April 2010. Broker only deals made up 25.8% of the market in April 2007, but now only make up 18.4%, with mortgages from both channels making up 27.9% compared to 52.3% in April 2007.

The research attributes this to providers no longer trading, and others struggling for funding which means direct products now dominate the market.

Kevin Bray, Insight Analyst for Banking at Defaqto, says: “Our research shows that 12 of the top 20 best buy fixed rate mortgage products are only available directly from the provider. The steady growth in direct only products over the last 2 years has clearly placed mortgage brokers at a disadvantage but it also leaves consumers with a difficult choice to make. Do they seek the advice of a mortgage intermediary or do they do their own research and approach the provider directly?”

He adds: “Mortgage intermediaries play an important role in helping buyers through the house buying process but consumers need to ensure that the broker they are using will advise them of the best deals in the market including direct only products.”

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  • nick johnson 2nd May 2010 at 10:46 am

    Why not use your knowledge to find the best direct or direct deal and charge the client a fee surley its a win win situation

  • Andrew 1st May 2010 at 6:15 am

    Ever tried getting proof of mortgage payments from RBS group on behalf of clients ? Have you been meet with sorry but the signatures do not match what we have on record. Please get the client to phone us etc client then phones in to give authority and the arrogant bank then tries to stop them from leaving by offering thema new deal.if you want to get rid of these types of practises vote conservative. Simple !

  • Andrew 1st May 2010 at 6:15 am

    Ever tried getting proof of mortgage payments from RBS group on behalf of clients ? Have you been meet with sorry but the signatures do not match what we have on record. Please get the client to phone us etc client then phones in to give authority and the arrogant bank then tries to stop them from leaving by offering thema new deal.if you want to get rid of these types of practises vote conservative. Simple !

  • Mortgage Broker N3 30th April 2010 at 4:42 pm

    Q: Why do lenders offer poorer products to brokers and better deals direct only? Does that make sense?? How does the client or lender benefit?

    What they are effectively doing is trying to prove that brokers are a worse deal so don’t use them.

    However, they will realise that Direct Only means having the LOWEST rates – why? because there wont be brokers to advise on criteria etc and getting new clients was how they used brokers for all these years – and now they have the clients, its goodbye broker.

    Lenders will have to compete on rate and LTV, and have the best to secure the custom – 85% of lenders wont be able to always be the cheapest or have the best LTV’s.

    Only 50% of the population will be happy to do online or direct only applications and not have a broker, why? because people want to speak to an expert and npt have the hassle of doing it themselves.

    Brokers can’t offer whole of market and charge a fee for mortgages as is suggested by so many ‘experts in mortgage advice’ – because they cant process the application so client is paying only for details!

    We only charge fees where a mortgage is approved and when we process the application, so how can you really justify a fee?

    No mortgage broker is immune to dual pricing. What may happen here is that lenders will offer deals to select brokerages only to help boost levels, and of course it will be the likes of L&C etc.

    We are shutting up shop this year, I’ve just accepted a job offer from Halifax, if you can’t beat them, join them.

    Mortgage Brokers – RIP.

  • Roy Watton 30th April 2010 at 4:18 pm

    A lot of this has to do with the fact that Lenders are in many cases offering better deals for clients to go direct, than they are to go via a broker. Even if the client does go through a broker, some lenders will then offer the client a better deal to abandon the broker and go direct. The rates offered are not available to brokers who though they can provide in many cases a better service can not match the rate.

  • Matthew Gamble 30th April 2010 at 3:54 pm

    I am torn.

    As a broker, this makes very tough reading. But on the other i can understand why the banks do it to a certain extent.

    With volumes low, and remortgaging activity virtually non existent with low SVR’s, lenders need to do Direct Only deals to feed the beast and keep staff busy and in jobs.

    On the other, it is making our already tough job more difficult.

    I feel we are being left to serve only the non-educated, the time poor and the newbies on the market, because if you are clued up and have a bit of time on your hands, why wouldn’t you go Direct Only.

    Is that the best advice for clients…no
    Is it TCF by the banks…no
    Will the FSA do sod all about it…no

  • Robin Banks 30th April 2010 at 3:48 pm

    Dear Anonymous,

    What matters is now, not what will happen in the next few years, that’s not going to help brokers today. I too hope the specialist lenders return and use the broker market as their distribution network but that doesn’t help right here, right now.

    Brokers are right to be miffed with the attitude of lenders on dual pricing and if I was a conspiracy theorist I would suggest that the demise of intermediary has been planned for a very long time ! Like I’ve said before, I hope brokers have long memories when the good times return and aren’t so shallow as to be seduced by the greenback!

  • Matt 30th April 2010 at 3:30 pm

    Fellow brokers, please stop going on about lenders wanting to cut out brokers. They do direct deals to get customers in through the door so they can sell the extras. Its got nothing to do with excluding brokers. We do not have to compete with direct deals. In the next few years most peaople will give up going direct. The service is poor and most deals will require brokers assistance because none of the deals will be straight forward.

  • Paul Tolliday 30th April 2010 at 2:52 pm

    Why would any adviser recommend a direct deal? The broker would receive nothing by this recommendation and the potential client would be lost forever because the lender will bombard them constantly with junk mail to keep them as customers. In good times lenders were more than happy to accept introduced mortgages and now they’ve crapped on us at a great height by offering dual pricing. I’ve had numerous enquiries where I’ve sourced the lender, obtained an agreement, sent the client the KFI, only to find they’ve gone to the same lender direct in order to get a better rate than I can offer as a broker by going direct. It’s tough getting a deal together and dual pricing makes it even tougher.

  • Carl McGovern 30th April 2010 at 2:02 pm

    As usual the lender whats to have the best of both worlds. They want the broker to sell their products, but are quite prepared to cut the broker out on price if they can.

    Most people seek advise and the direct deals are normally not available on an advised basis. Fortunatley if the broker does the job correctly, a client will seek the benefit of independant advise and accept that they need to pay a fee for this, if the lender only offers the deal direct. Its a shame though that the lenders can’t decide what the want. Surley it would be better to offer deals via the intermediary with no procuration fee than just try to cut the broker out. Is this too simplistic is their alterior motive?