Brokers urged to target borrowers let down by high street lenders

In a wake-up call to the industry, mortgage brokers are being urged to actively target borrowers who are not being serviced by high-street lenders.

The research by YouGov, commissioned by Legal & General Mortgage Club and the Association of Mortgage Intermediaries, questioned 2,113 current borrowers.

It found that while 81% of borrowers would rather make one attempt at securing a mortgage than trawl the high street, only 44% actually plan on visiting a broker during their next attempt to secure a mortgage.

The study suggests that 3.4m (one in three) of the 11.3m mortgage holders in the UK plan to secure a new mortgage over the next 12 months, with 1.3m wanting to buy a house and 1.6m looking to refinance their current deal.
 
However, borrowers are anxious about the mortgage choices available to them, with only one-third of all borrowers very confident that they could get a new loan if they applied for one. One in ten are worried their credit record may be an issue, while one in four feel their income level is too low and one in five believe they don’t have enough deposit.

Ben Thompson, managing director of L&G Mortgage Club, said: “Many borrowers don’t realise that chasing the headline rates that high-street lenders advertise may lead them to making multiple attempts at securing a mortgage.

“At present, more than half of all borrowers say they would apply for a mortgage directly with a high street lender, with the majority doing so purely because they have an existing relationship with one rather than because they knew they offered the most appropriate deals.

“It’s clear that borrowers would benefit from professional, impartial advice that will potentially open up a lot more financing options for them, and brokers have a golden opportunity to tap into this part of the market.”
  
Analysis of the mortgage products available direct shows that many borrowers are likely to be disappointed by high-street lenders: 34% of borrowers have a deposit of 10% or under, yet only 17% of current best-buy products are available to these borrowers. The 2.3m borrowers (21%) with deposits of 5% or less have only 2% of the market to choose from. In addition, interest rates at these LTV levels are the highest in the marketplace, averaging well over 5% APR.

Robert Sinclair, director of the Association of Mortgage Intermediaries, said: “There is a discernible gulf between the needs of many borrowers and the reality of what is being offered by high-street lenders.

“Such is the dearth in appropriate products that more people need better advice and a wider choice, and this represents a vast pool of potential business for brokers.

“Brokers need to educate the consumer and be more proactive if they are to turn this latent demand into new business. The mortgage market isn’t suddenly going to spring back to pre-downturn levels, so it’s up to brokers to make the most of the opportunities out there.”