Mortgage brokers being 'frozen out'
Updated on 20 October 2008
More than half of mortgage brokers say they often do not have access to the most suitable home loan for their customers, research shows.
Intermediaries complained that they were being "frozen out" by lenders, many of whom are increasingly only offering certain products to borrowers who come to them directly.
Some lenders have introduced higher rates for people who take out a mortgage through an intermediary, while others will only advance higher loan to value ratios, such as 95%, to those who apply for the loan direct to them.
About 54% of brokers said having searched the whole market for clients the most appropriate product was sometimes not available to be taken out through brokers, with only 22% saying this had never happened to them, according to the Intermediary Mortgage Lenders Association (IMLA).
When this happened 63% of intermediaries had still recommended the product on at least one occasion, while 37% suggested their customer contacted the lender directly without them recommending a specific product.
But one in five said when they had suggested this course of action to their client, they had been happy to take out the best mortgage the intermediary could source for them.
Just over one in four intermediaries said they thought recent developments in the mortgage market meant their service was no longer representative of the whole market.
Peter Williams, executive director of IMLA, said: "The market has become increasingly more difficult for intermediaries.
"They are struggling with sharply lower business volumes, as mortgage activity has shrunk considerably and home buying activity is depressed.
"In addition, quite often they find that the most appropriate product for a given customer is only available direct from the lender - so they are effectively frozen out. Even so, most brokers will direct their customer to that product or lender, even if they do not benefit directly from it."
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