Brokers in mortgage deals complaint
Updated on 05 May 2008
Mortgage brokers have complained to the City watchdog about moves by high street lenders to limit the amount of business they do through intermediaries.
The Association of Mortgage Intermediaries (AMI) has lodged a complaint with the Financial Services Authority about recent changes some lenders have made to their mortgage ranges, limiting the deals available through intermediaries and raising the cost of the ones that remain.
Increasing numbers of consumers are thought to be turning to brokers for help in negotiating the currently rapidly changing mortgage market.
The credit crunch has led to the most competitive mortgage deals being pulled soon after they are launched, sometimes with just hours' notice, as lenders are inundated with business, and consumers taking out a home loan through a broker have a better chance of catching them before they are withdrawn.
But AMI claims lenders' branch-based business is suffering as a result of the high numbers of people choosing to use a broker. It said margins on deals taken out directly with the lender tended to be higher as they do not have to pay commission to an intermediary.
As a result, a number of the UK's biggest mortgage providers are trying to redress the balance by offering their best deals only to people who contact them directly.
Nationwide Building Society last month launched an offer under which first-time buyers applying for its three-year tracker or three-year fixed rate mortgages could get a £300 discount on their reservation fee and a £100 discount on legal fees, but the deal is only available to customers who go direct.
Halifax and Cheltenham & Gloucester both recently announced they were increasing their rates by up to 0.6% for people who take out a mortgage through a broker, while keeping the cost of branch-based loans on hold. The move came just over a week after Halifax had previously hiked some of its broker rates by up to 0.5%.
Chris Cummings, direct general of AMI, told the Independent newspaper: "Lenders have seen branch-based business really suffering. So in order to try and balance their business, instead of offering equal access to products across all channels, they've started introducing mortgages that are only available directly and not to intermediaries.
"Lenders are under pressure to rebuild their capital position, and as a result are trying to increase margins and drive more people through their branches. But we have taken this up with the FSA and said it is consumers who are losing out."
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