New Research just released from the technology group, Avelo indicates that despite the development of the Internet, just over 1 in 20 mortgages are being sold direct on the Internet. The research also confirmed that only 15% were conducted direct over the telephone.
Despite large scale, Bank branch networks, only 27% were conducted at a local Bank and 15% being arranged within the premises of local building societies.
The research concluded that consumers are choosing Brokers to arrange their mortgages with over 60% of all deals now arranged through intermediary channels.
Building Societies were found to rely more significantly on the intermediary market, with 75% of all business conducted through mortgage brokers. The holistic underwriting services offered by the mutual, has assisted many consumers, who have previously failed the Bank’s ‘black and white’ automated credit scoring regimes.
The traditional underwriting policies employed by a number of mutuals have historically been based on common sense lending. This has made them a particular favourite of brokers in recent months, given cases may not be automatically declined, solely on a slight credit blemish.
Comparison websites such as www.moneysupermarket.com continue to provide headline rates based on price, but many customers are becoming more savvy, appreciating that the lowest rate is not always the overall cheapest once other charges, such as arrangement fees, valuations and penalties are built in. They also realise that lenders offering the best deal can restrict the type of applicant they are looking for and cases can be declined based on client profiling, the location where they live, as well as credit score.
The research further concluded that initial mortgage applications actually receiving a mortgage offer was found to be highest in the consumer and mortgage broker channels at 76% and 75% respectively. The actual offers then going to completion were also found to be the highest at 85% and 79% showing strong evidence of the value of mortgage brokers.
In light of the FCA’s recent Mortgage Market Review and the focus on all mortgage customers having the benefit of appropriate mortgage advice, there is likely to be a further move away from offering an online mortgage loan.
Lenders will soon be compelled to confirm that the customer has been given advice and that the advice is suitable. This will allow the consumer to make an informed decision. The new regulatory rules will ensure Banks can no longer provide mortgage products to the public, on an execution only basis or without suitable advice.