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Miles in turn on churn

Professor David Miles says he did not mean to point the finger at intermediaries and accuse them of churning in the mortgage market.

Last December, when he published his interim report on long-term fixed-rate mortgages in the UK, Miles hit out at mortgage brokers, saying they contributed to churn because it is to their advantage to sell shorter-term products.

This was met with a barrage of criticism from brokers who point out that remortgaging can be in a consumer&#39s best interests.

However, speaking to Money Marketing last week, Miles now says he understands that it is the role of a good IFA to show good mortgage deals to customers and to advise them accordingly.

But he says the cross-subsidisation generated by churn, with existing borrowers paying a higher standard variable rate to subsidise discount deals, is undesirable.

He points out that considerable economic resources are used when consumers move between lenders and he describes this as not productive.

Brokers welcome Miles trying to clear up the issue. They say that any broker is duty-bound to look at moving a mortgage.

Miles says: “I understand the role of a good IFA is to show a good deal to a customer and I did not mean to point the finger.”

Mortgage Intelligence managing director Sally Laker says: “I am pleased that he has clarified his thoughts and cleared up any potential misunderstanding that could have occurred.”

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