Lenders need to offer remortgage incentives to brokers to curb churning, says Legal & General.
The comments from L&G, which runs one of the UK's biggest mortgage clubs, follows recent research from the CML and PA Consulting revealing that churning could cost the industry £3bn in the next two years.
L&G housing marketing director Steve Smith says lenders often offer a retention product directly to the customer to encourage them to remortgage with them but little is done to involve the intermediary.
Smith believes that churning could be reduced if lenders offered a fee to intermediaries to encourage them to remortgage clients with the same lender.
But intermediaries and lenders say it might not be in the client's best interests to remortgage with the same lender as it is possible that they could get a better deal elsewhere.
Smith says: “At the moment, lenders are doing little or nothing to incentivise intermediaries to remortgage their clients with the same lender.
“If lenders can think of ways to do this, for example, by offering a fee to the intermediary, then it would reduce churn. It is important that an intermediary is still recommending a product that is in the client's best interest though.”
Prudential national mortgage club manager John Malone says: “Lenders may well have to consider offering remortgage fees as the last thing that they want is their mortgage book turning over every three years.”
Intelligent Finance chief executive Grenville Turner says: “I wonder whether this would be economically viable for the lifetime of a mortgage. Also, an intermediary should always look for the best deal for a client.”