New research by one of the UK’s biggest mortgage lenders and a leading price comparison site has shown that mortgage brokers are unable to access most of the best deals on the market.
90% of the cheapest mortgages currently available are only offered direct to consumers by lenders, according to Moneysupermarket. It looked at the market’s most competitive two and three year fixed-rate mortgages, as well as two-year tracker deals.
Meanwhile, HSBC analysed information supplied by financial data firm Moneyfacts and found that 93% of the market’s lowest mortgage rates over the last two years were accounted for by ‘direct only’ deals.
Of 96 mortgages which held the position of lowest rate on the market during that period, the research shows, mortgage brokers could only beat the equivalent best direct deal offered by lenders on six occasions.
Mortgage brokers frozen out
Before the credit crunch, mortgage brokers sold up to 70% of all mortgages. During the property boom, the mortgage market was fiercely competitive, with brokers able to play lenders off against one another and obtain exclusive deals that would entice customers to borrow.
However, as a result of the financial crisis, most banks dramatically reduced the number of mortgages extended to customers and tightened up their lending criteria. Increasingly, mortgage brokers were frozen out of the lending process, with exclusive broker deals becoming less common and ‘direct’ mortgages dominating the best buy tables.
Martijn van der Heijden, head of mortgages at HSBC, said: ‘The research shows just how much the mortgage market has changed over the last two years. With loans available from brokers failing to beat direct lenders’ lowest deals for over 90% of that time, customers can no longer rely on brokers to get them the best deal in town.’
Kevin Mountford, head of banking at Moneysupermarket, commented: ‘Anyone using a mortgage broker needs to be aware that the range of products available may be limited.’
Finding the best mortgage
For consumers on the hunt for the best mortgage deal, the current situation can create a dilemma. Many might assume there is little point in speaking to a mortgage broker now, yet this could mean missing out on guidance that could help you choose the right deal.
Which? property and mortgages expert Cathy Neal says: ‘While you can no longer assume a mortgage broker will find you the cheapest rate, their services are still of real value to consumers.
‘Anyone who’s unsure of what type of mortgage might suit them or has unusual lending needs – for example, self-employed people – should still strongly consider speaking to a mortgage broker to get advice. If you don’t, you could end choosing an inappropriate mortgage and come to regret this later – whereas if you buy the wrong mortgage through a broker you may have means of redress.
‘Nevertheless, this research shows the importance of doing your own research at the same time as consulting a broker. A good place to start is by using the Which? , which compares deals based on their total cost – not just their headline rate.’
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