According to Home Buyer Systems, the true cost to customers of choosing an intermediary mortgage can be up to around £208 per month more expensive than a comparable direct to lender product, over the first two years.
In addition, HBS says the choice of products available via intermediaries is very limited compared with direct to lender equivalents. For first-time buyers, HBS data says there are no intermediary products at 90 per cent loan to value, and the intermediary share at 85 per cent LTV accounts for seven out of 60 available products.
Likewise, HBS data says that for second-time buyers and remortgages, there are no intermediary products at 90 per cent LTV, and the market shares at 85 per cent LTV are 13 per cent and 10 per cent respectively.
HBS managing director Richard Angliss says: “There are differing opinions on the gap between intermediary and direct products, but no-one can argue with our statistics. Mortgage advisers exist to find the very best deal for their clients, but overwhelmingly this deal is likely to be a direct product.”
As a result of the changing climate, HBS says there has been a surge in fee levels charged by mortgage intermediaries. Angliss says: “One of our customers has 70 per cent of their mortgage income generated by fees – up from nothing four months ago.”
HBS says overall fee levels handled by its payment system have risen by more than 300 per cent in the second quarter of 2009.