"Making blanket statements for a market as complex as mortgages is asking for trouble."
A headline in yesterday's Sunday Times Money section titled ‘Stick with your lender — you will get a better mortgage deal’ has received backlash from mortgage brokers.
While the article states that "homeowners may no longer have to switch banks to get the best mortgage deal as lenders continue to cut rates", advisers were not impressed, with some saying the headline “could absolutely be construed as advice”.
Brokers responded with their views:
Paul Neal, director of mortgages and equity release at Missing Element Mortgage Services: "It's true that you 'could' get a better deal by staying with your current lender, but not the case that you 'will'. It may be that you could get a better deal going elsewhere. The safest option is to speak to a broker who can have a look at the best options that fit your circumstances to secure the best deal."
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services: "The problem I have with headlines like this is that, while the certainty of “will” gets replaced with the more correct “may” in the first paragraph, what of all the people who just read the headline? They are now likely to be entering a market with completely the wrong idea and could end up with something inappropriate for their current needs. The headline makes the assumption that the only important thing about selecting a mortgage is rate, which is wrong. What if they want to make a large overpayment, extend the term or change from interest-only to capital repayment, or they plan to move in the next couple of years? All of these additional elements need to be factored into finding the right deal. It's not just about finding the lowest rate."
Lewis Shaw, founder and mortgage Expert at Shaw Financial Services: "This headline could absolutely be construed as advice. I could never write a strapline such as that and have it approved because it's deliberately misleading. One of the central tenets of financial regulation is: "A firm must ensure that a communication or a financial promotion is clear, fair, and not misleading". However, they dodge a bullet as they're not a regulated entity and therefore those rules presumably don't apply. Hopefully readers take anything like this with a pinch of salt because it's categorically not true. The number of people I see that have renewed a mortgage product themselves and for one reason or another got it wrong and end up having to pay a huge redemption penalty. The Dunning-Kruger effect is strong in the mortgage market and we need to ensure the public is not harmed by throwaway headlines like this."
Graham Cox, director at SelfEmployedMortgageHub.com: "Making blanket statements for a market as complex as mortgages is asking for trouble. Everything depends on the client's circumstances at the time. It's certainly true that a product transfer with the existing lender could be the most suitable option, but often remortgaging to another provider is the best bet, and potentially could save thousands of pounds."
Jordan Price, operations director at Castle View Finance: "This headline sets off alarm bells immediately. The reason for this is the definitives used within the wording of ‘Stick with your lender — you will get a better mortgage deal’. It clearly states that you will get a better deal. This should be changed to something more akin to "consider sticking with your lender - you might get a better deal". Though I know this isn't as attention-grabbing, someone will likely take the article at face (or in this case, headline) value and not put much more thought into it. The headline is not only problematic from an advice standpoint, but it's not factually correct."
Hannah Bashford, director at Model Financial Solutions Limited: "This is a surprising headline in that it is saying you 'will' get a better mortgage if you stay with your current lender, as we know that is simply not true for everyone. Even with the change of words to 'may' if a person is skimming through the news and has had an email from their lender where they can just click a few buttons to get a new deal, they may take that headline as advice to just go with that — and they could then be losing out on a better deal. I recently had a client that was going to go with their own lender but we looked at the whole of the market and were able to save them just under £1000 over 2 years by switching so it is not always best to go to your current lender."
Iain Swatton, head of mortgages at Dashly: "There are many mortgage products available in the market place making it difficult for the consumer to make a fair comparison on their own. Lenders will only offer advice against their product range and in many instances leave it for the borrower to decide what is best for them. This can be costly in the long run depending on any product tie-in or early exit fees. A borrower should always seek independent whole-of-market advice from a broker who can look at all lenders including the borrower's existing lender."
Paul Donoghue, CEO at Concept Financial Services: "With regards to the headline, it would be advisable to make a subtle alteration from "will" to "may." Clients often do not fully comprehend the intricacies involved in a mortgage rate switch, and it is important to seek financial guidance in order to evaluate the product transfer options offered by both their existing lender and the wider market. Additionally, it is pertinent to take into account the client's future aspirations and any potential plans to move in order to identify the most appropriate deal that aligns with their financial objectives."
Naomi Dent, specialist mortgage broker at Avail Mortgage Brokers: "When looking to remortgage, you should consider all your options. That means looking to see what your current provider can offer and what is available with other lenders — and opting for the most cost-effective option. This is what any broker should be doing. Of course, sometimes it is more cost-effective to stay with your current lender but a lot of the time there are more appropriate deals with other lenders. This is why you should use a broker to ensure all options have been considered, which will ensure you are getting the very best deal for your needs and circumstances."
David Conway, director at Clayhall Financial Services: "Mortgages are a specialist subject and generalisms like this should not be made. This article was sent to me by a client whose mortgage I'm reviewing and is with Barclays. However, a remortgage to Coventry Building Society saved her 0.3%. There are times when changing rate whilst staying with the same lender is both the correct and most convenient decision, but it's impossible to make a statement that applies to even a large minority of the public."
