Turn the clock back 20 years to 1983. The year of the Falklands, the
year Prince William was born – and those were the days when most
people were on first-name terms with their bank or building society
The clinical efficiency of telephone and online banking, for example,
was the sort of concept imagined on Tomorrow's World. A recent CML
survey has revealed that while so much has changed, we still crave
the “personal” touch of face-to-face advice.
The UK mortgage market has evolved dramatically over the last two
decades. Gone are the days of the mortgage Cartel, where mortgages
were only available via building societies and a few friendly
societies. Once a borrower managed to find a lender that was willing
to offer them a mortgage, their choice of rate would consist of an
SVR and maybe the odd lifetime fixed rate.
Now the choice runs to over 4,000 products available via banks,
building societies and supermarkets, with rates ranging from fixes,
discounts, trackers and caps.
In fact, the mortgage market of the early 80s certainly seems like
something from the Dark Ages compared with the abundance of choice
that borrowers enjoy today.
If somebody wanted a mortgage in 1983, they would have to all but get
down on bended knee in order for a lender to consider their
application. Today, it is the lenders who have to go down on bended
knee in order for the borr- ower to honour them with their business.
With so many products to choose from, it is no surprise that a recent
survey commissioned by the CML stated that 79 per cent of those asked
prefer to discuss their loan options face to face. Unsurprisingly,
this figure increases to 83 per cent for first-time buyers.
With each deal on offer having it is own pros and cons to take into
consideration, the 21st Century borrower, whe-ther a novice or a
seasoned professional, appreciates a guiding hand, even if they have
to pay a fee for it.
The CML survey goes on to say that while the internet is seen as a
useful tool to seek out and research mortgages, it is still seen more
as a source of research than as a means to transact a mortgage online.
But with the advent of online banking and more and more people
using the internet to research and buy products and services, it
stands to reason that the net has an important part to play in the
evolution of the mortgage market.
There are borrowers who are confident enough of their own knowledge
of the market to feel comfortable about transacting online.
Multi-channel propositions give borrowers the choice of doing just
that, with emphasis on the word choice. As any broker knows, the
indepth advisory process is a labour-intensive face-to-face process.
It has to be – the market is that complicated.
Those people choosing to take this route would find a competitive
broker fee acceptable and reassuring (recent consumer research
continues to reaffirm that, in general, consumers are more inclined
towards paying a fee for products such as mortgages).
Those who feel they know enough of the market to route out the best
deal can choose to do so online without face-to-face advice although
they still get the same support during the process and, therefore,
without having to pay a fee.
Just as in 1983, the thought of not paying an SVR on a mortgage would
have been as unthinkable as only paying an SVR on a mortgage in 2003.
The next logical phase should mean that arranging a mortgage online
should be as natural as seeking face to face advice. One complements
the other perfectly. It is all down to one simple, initial choice –
advice for a fee or online for free?
Colin Bell is head of adviser operations at Charcol