But when it comes to mortgage decision-making, is there any evidence people are avoiding the high street brands or does the lowest repayment outweigh corporate reputation every time?
Examining the issue in this week’s Market Watch are:
Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA)
David Hollingworth, London & Country Mortgages
Terry McCutcheon, chief executive of The Finance Planning Group
Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA)
It would not be surprising if a bunker mentality is setting in over at Canary Wharf with reputation damaging issues hard to ignore. The news is clearly having a tangible effect both on consumer sentiment and the action they are taking.
Independent research commissioned by the BSA shows that 66% of people now trust banks less than they did and our members are seeing the result with an increase in customer enquiries of up to 30%, and savings and current account transfers running well ahead of normal.
That said, moving a mortgage is a very different thing and we don’t expect to see wholesale remortgage activity outside the normal cycle. Nor do we expect borrowers to lose sight of interest rates.
Cost will still be up there along with service and the addition of reputation. Mutuals will benefit through a positive amalgam of being open for business.
In the first five months of 2012, mutual mortgage lending was up 40% year on year, compared to a 4% rise at the banks. In the same period, mutuals accounted for 78% of mortgage best buys, and offer a more personal level of customer service.
David Hollingworth, London & Country Mortgages
Bank bashing has become something of a national sport recently and the reputation of banks cannot get any lower.
On the other hand, although building societies have not been immune to the pressures of the economic conditions they have a very positive story to tell.
In many cases building societies are offering well priced products, often with the promise of a flexible and sensible approach to underwriting. We have been staunch supporters of mutual lenders, from large to small, for a long time now and believe they have something of real value to offer intermediaries and their clients.
However, I’m still not sure that the low level of regard for banks is enough to turn customers away from taking a mortgage with a brand.
Borrowers are first and foremost concerned with securing a great value product from an institution that will lend to them. Just as clients are happy to listen to what’s on offer from a smaller regional society most will also remain engaged if it is a big plc.
The broker’s role remains the same – to understand the customer preference and provide advice on what represents the best blend of rate, service and criteria to match that specification.
Terry McCutcheon, chief executive of The Finance Planning Group
Recent debacles, in particular Nat West’s IT problems and Barclay’s Libor-fixing scandal have really not helped the public’s already diminishing confidence in the UK’s high street banks.
The public have become even more wary about trusting their own bank with their ‘one size fits all’ mortgage approach and as a consequence this should encourage more potential mortgage customers to seek out and use reputable independent mortgage brokers.
Our slogan; ‘It’s all about you’ is about putting the customer first. This positions Finance Planning’s professional mortgage advisers on a completely different plateau to the high street banks. Our advisers will source the whole market, including all of the high street banks and the mutual building societies, for the best mortgage for its customers.
The question of the long-term sustainability of some lenders will always be asked when discussing mortgages. However, this is clearly not as crucial an issue for borrowers as it would be for investors, and the industry can comfortably reassure borrowers that in that event their mortgage debt will be passed on to another lender.
The danger here, which may arise if a lender ‘goes under’ is that the mortgage debt is sold on to a lender with punitively high interest rates, which may lead to the borrower paying more and potentially not being able to afford the repayments.
