This is something that has been done by other banks directly in the past. But is bundling up other products with a mortgage really the best thing for clients?
The pilot was launched with some Legal & General directly authorised brokers as well as with Pink and BDS appointed reps and will run indefinitely, depending on its success. Abbey says borrowers who take up this option will benefit from either a preferential rate of interest or a reduction in the booking fee depending on which mortgage product they take out.
This scheme was announced by Abbey for Intermediaries managing director Ricky Okey at the end of March, and was initially trialled by London & Country in 2008. L&C mortgage broker David Hollingworth said it was a success for the brokerage and went down well with some clients.
There is no doubt why Abbey are trialling the scheme – with such a lack of competition in the market it can afford to try and persuade more borrowers and savers under its wing, and it knows it can make a healthy, long-term profit through current accounts. It also knows that a current account can lead to an Abbey savings account, or an Abbey ISA or even an Abbey credit card. For Abbey, it’s a no-brainer.
But is it as good for the consumer? Obviously they will enjoyer the lower mortgage rates, but is it asking a lot for someone to up sticks and move all their finances? Most of us have had our current accounts for many years and for us to move them across to another provider would be a monumental headache.
L&G head of mortgages Ben Thompson thinks this is a win for Abbey, a win for advisers and a win for consumers. He says the only question is whether the scheme will take with borrowers.
Also, some mortgage commentators I have talked to have predicted that this might be the first of many bundled products.
So what do you think? Is it a shrewd move by Abbey or is it a risky one? Will consumers warm to bundled deals or will they shy away from an overload of financial products?