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FCA should know not every customer will be driven by rate – Copland

by: David Copland, director of mortgage services at TMA Club
  • 10/08/2018
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FCA should know not every customer will be driven by rate – Copland
Value for money is a key theme but can be hard to quantify. How do you judge value for money? It is purely cost? Is it quality? Longevity and durability? Or is it a mix of a variety of factors?


For a mortgage, there are a whole range of considerations when choosing a particular lender or product; fixed rate vs tracker, two-year or five-year term?

Brokers play a vital role in helping clients to understand the options available to them and to narrow this down based on their requirements, financial footprint and future plans.

This includes helping to determine what is most important to the client. For example, is it the headline rate, or is it something different?


70% satisfaction rate

The Mortgage Market Study report from the Financial Conduct Authority (FCA) indicated that price should be a key driver when looking at suitable mortgages for their client – and that initial rate should be front of mind when engaging with clients.

Interestingly the study indicated that 70% of consumers had been provided with the most competitive rate.

But a 70% satisfaction score is no mean feat and the industry should be applauded for its commitment to helping borrowers.

However, there is still work to be done and the regulator is keen to see this figure creep up to 80-90%, if not beyond.


Greater freedom

While this drive is to certainly be celebrated we also need to remember that not every customer will be driven by the rate.

Some borrowers will be driven by the desire to port their mortgage, which the most competitive offers may not provide.

Others will want to drastically overpay, which may make some of the headline rates and lenders ill-suited to the borrowers’ specific needs.

Retention criteria may be stifling for some borrowers who want greater freedom – while for others they want to stick with a tried and tested name that they recognise, and they’ve dealt with before.


Specialist needs and products

The target also fails to take into consideration those borrowers requiring specialist products and services who will need to look outside of the mainstream market.

This might include self-employed individuals, those with a CCJ, or other considerations that require them to be on a specialist lending rate.

These borrowers might not necessarily be offered the most competitive products – but instead get mortgages that provide them with the specific benefits they need.

The impact of technology has assisted lender and clients alike, but from a broker perspective there is more that can be done.

Platforms that negate the need for 20+ decision in principle (DIP) forms to find the best deal are certainly welcome, but at the moment it is often the case that brokers lean on two or three lenders for a DIP.

When it is known how much a client can borrow and if the rate is competitive, they often have the propensity to stick with that lender.




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