Direct only mortgage deals account for 93% of lowest rates

HSBC has analysed data supplied by Moneyfacts which shows lenders dominate lowest rates across fixed, tracker and discount mortgages.

Analysis of data supplied by Moneyfacts has revealed that of 96 mortgage deals which held the position of lowest rate in the market at some point over the last two years, only on six occasions could brokers beat the rate.

By analysing the independent Moneyfacts data, HSBC looked at the lowest mortgage rate available from mortgage brokers and directly from lenders, across the four most popular mortgage categories: two year fixed, five years fixed, two year trackers or discounts and lifetime trackers.

The difference in rates was most significant for two year trackers and discounted mortgages, over the last two years, the cheapest direct mortgage has on average been 0.47% cheaper than the best deal available from brokers.

Similarly for lifetime trackers the margin has been 0.32%, for two year fixes 0.26%, and five year fixes 0.19%.

The average gap between all mortgages studied was 0.31%, for at typical £150,000 mortgage it equates to £465 per year in extra interest.

Martijn van der Heidjen, head of mortgages at HSBC, says: “This research shows just how much the mortgage market has changed over the last two years. With loans available from brokers failing to beat direct lenders lowest deals for over 90% of the last two years, customers can no longer rely on brokers to get them the best deal in town.”

At the height of the property cycle in 2007, brokers sold as many as 7 in 10 of all mortgages.

Van der Heijden, adds: “No one can argue that shopping around isn’t the most sensible approach to take when looking for a new mortgage. 

“Going to a broker can be a useful part of this process, but as this research clearly shows it definitely shouldn’t be seen as the route to guaranteeing you the best deal. Borrowers need to check newspaper best buy tables, comparison sites and lenders directly to ensure they are getting a great deal.”

HSBC says it has never sold its mortgages via intermediaries, the bank’s strategy is that it believes it is best placed to sell its own mortgages, and that lender and borrower need to deal with each other during the sale process to make the best lending and borrowing decisions. 

It says the growth in directly sold mortgages is proof that more lenders are realising that holding the ongoing relationship with their customer is more important than just making another sale.

HSBC says it accepts around 8 in 10 of all customers who apply for a mortgage with the bank.

HSBC was the largest net mortgage lender in the UK in 2008 and second in 2009, with a market share trebling in two years from 3% to 10% of all mortgage sold in the UK.