Almost 83% of brokers reach out to customers as the end of their product approaches, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index.
In terms of contact, half of intermediaries said they always contact customers as they approach the end of their current arrangement and one third said they usually do so.
Intermediaries assist customers to review a range of different options available to them, including switch products on offer from their existing lender and remortgage products available from alternative providers.
On average, intermediaries said that 43% of their customers chose a product switch with their existing lender rather than remortgaging when their mortgage reached maturity.
Two thirds of intermediaries said they would never or only rarely recommend a product switch at a higher rate, while one third said that they would do so in certain circumstances for the benefit of convenience.
FCA’s Mortgage Market Study
In an interim report in May, the FCA pointed to high levels of consumer engagement in the mortgage market, with over three quarters of customers switching to a new mortgage deal within six months of moving onto a reversion rate.
The final FCA report is expected to identify ways in which technology can enhance customer choice and the FCA has announced an initiative to improve the experience of ‘mortgage prisoners’ – those left servicing a mortgage on a relatively high reversionary rate because market-level changes to mortgage affordability left them unable to switch to a better deal.
John Heron, managing director of mortgages at Paragon (pictured), said: “These findings demonstrate the important role intermediaries play in encouraging competition and choice in the mortgage market, offering a proactive prompt to customers to review their options at the end of their current deal.
“What’s interesting is how intermediaries encourage customers to weigh the benefits of a switch product with an existing provider against a remortgage with a new lender when deciding what action to take.”