Email suggests that lenders are using the mortgage equivalent of Botox at present by adopting a short-term dual-pricing policy which may smooth their business lines for a period but will ultimately leave deep fissures within the market, particularly for advisers and consumers.
The warning comes following grave forecasts made by the intermediary trade body, the Association of Mortgage Intermediaries (AMI), which recently forecast a halving in the number of active mortgage brokers in the UK if current trends were to persist.
Email believes that, by choosing to offer better priced mortgage products through their direct channels, lenders are undermining both advisers themselves and consumer’s potential to access advice in the future. Email suggests that consumers could face an ‘advice vacuum’ if lenders continue to persist with a policy which puts the more competitively-priced products out of the reach of advisers.
Michael White, Chief Executive at Email Mortgages, commented: “Despite some positive news in recent times, the mortgage market is still not functioning as it should and these continue to be difficult times for many borrowers and their advisers. Lenders continue to focus on the short-term by adopting a policy of dual-pricing rather than look at the fundamental benefits of mortgage advice and an understanding of where the majority of their business has come from in recent years. Given the nature of the current market, this mortgage Botox approach could deal a mortal blow to many mortgage advisers, taking them out of the market at a time when there has arguably never been a greater need for financial advice.
“Deep long-term cracks will appear within the mortgage market if this approach persists and one must question whether lenders really have consumer’s long-term interests in mind if their ongoing actions lead to the vast majority of advisory firms going out of business. Consumers who are lured in on lender’s deeply discounted direct deals may find they have few advice avenues to explore when their special rate ends in a few years time. This is not in the consumer’s best interests and there must be greater dialogue between lenders and advisers about this approach and who it is actually benefiting in this market. For those who argue that dual-pricing has always existed, we would suggest it has not operated in conditions like this before and therefore it is having a massively disproportionate effect. The time has come for lender’s to acknowledge that mortgage advice is a positive and they must adopt strategies that help not hinder the ability of consumers to access that advice now and in the future.”