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Mortgage View: What is best advice?

What constitutes best advice in the mortgage market? We all know that it is more than price and includes value and service levels of the lender. But every so often a product comes along which ticks all the boxes and you question why anyone else can be doing business at all in that sector.<

Alliance and Leicester has held a strong pricing proposition which has probably made it the only big player to have hit its real unpublished targets. However, its procuration fees have deterred brokers as this is not in the customer’s best interest.

But we now have a best-buy range that even ticks this box. I am talking about Michael Bolton Memorial range launched a couple of weeks ago by BM Solutions. Despite the large upfront fees, these products represent by far the best value for loans from about 150,000 upwards.

So why are other lenders still doing business in this sector which is mainstream intermediary territory? Some might argue that the fees represent a deterrent but if the total cost is lowest for the customer, we should be taking a more holistic approach and recommending that the fee is added but then split into 24 and telling the client to save this amount each month in a high interest account so that on exit from the redemption period, you can repay the fee.

The only answer seems to be laziness among brokers, the habit of using the same lender because of well established relationships and per haps the ease of doing business in this way.

The issue of value also takes me into another area where I am concerned about sourcing systems. Lenders are rapidly moving to scorecard-integrated afford-ability models which make income mult-iples on which sourcing engines rely ineffective. In today’s world, affordability and higher income multiples are where many brokers find themselves doing most of their business.

A real problem is where the lender scores the client as the affordability calculation is performed, thus building up search footprints which may make the next attempt worse and damage the client’s credit profile. A true broking platform would take one credit reference and fire up a number of lenders’ cards online to get the optimum price and affordability mix. But lenders hate this idea and will not cooperate with it.

In time, a solution will appear but it’s unlikely to come via the current trading platforms. It is an area that is going to put brokers at risk of retrospective misselling claims, so we are left where we began – what is best advice in today’s world?

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