A report out this week from price comparison site Compare The Market suggested that a significant number of first-time buyers regretted using a broker.
Almost one in five said they believed using a broker added no value to the process of buying a property, while more than a quarter said they felt they had overpaid for an intermediary.
Should the client get more updates?
Paul Flavin, managing director of Zing Mortgages, noted that a number of first-time buyers his firm has dealt with lately admitted they had previously had no idea of what a mortgage broker actually does, adding: “Their impression was that a mortgage was sourced either from their bank or the estate agent they would be buying through.”
Flavin added that the industry needs to look at how what it offers contrasts with customer expectations, pointing out that with other products and services, clients are used to receiving much more regular progress updates.
“The average adviser seems to feel it’s OK to meet with the client, complete the details, submit the application and then go silent until either further information is required or the offer is received. This silence happens at a time when the client needs the most support and they end up having to chase the adviser for updates, which leads to them feeling the service offered has no value.”
Educate as well as advise
David Sheppard, managing director of Perception Finance, argued that when it comes to first-time buyers, the role of the broker is not just in helping to find the mortgage, but also to act as an educator.
He continued: “We have written a guide for first time buyers to outline the considerations and factors of a house purchase so that they not only have the verbal communication with the adviser but a ready guide should they need it.”
Sheppard noted that a problem that brokers face is that borrowers don’t get constant communication about the various tasks the intermediary is undertaking on their behalf.
“To start updating clients every day on each small interaction with the lender, estate agent and solicitor throughout the process would be information overload. There is a lot of phone calls, being on hold and frustrations with duplicate lender requests that clients do not get to see,” he continued.
Personal interactions help clients see value in a broker’s work
Greg Cunnington, director of lender relationships at Alexander Hall, noted that a lot of the firm’s clients come from personal referrals, which demonstrates that once someone has seen the value of advice, they want their friends and family to experience the same thing.
He emphasised that it is crucial that brokers educate clients on the exact role of the mortgage broker in the first meeting with any potential borrower.
Cunnington added that Alexander Hall encourages borrowers to have a face-to-face or telephone meeting in order to help educate first-time buyers, arguing that if a broker only interacts with a borrower via web chat or emails, the borrower may not understand just what the adviser is doing on their behalf.
He explained: “If a client has only interacted with a decision tree web chat, seen some rates, and then had an application submitted for them with no human interaction and very diluted advice, I can imagine they might feel like they did a lot of the heavy lifting themselves and wonder what actually the benefit of the broker was.
“That is why we very much want to always emphasise the importance of a broker and the value of advice, and see the future as being an Omni channel process with human interaction always embedded within that.”