Some lenders are forgoing the advice process for remortgages, as Santander is writing to clients six months ahead of the end of their mortgage term end to offer them a lower rate and wave the early repayment charge.
As much as £100bn of mortgage business is going undocumented in the form of product transfers according to Association of Mortgage Intermediaries chief executive Robert Sinclair.
Some lenders are forgoing the advice process for remortgages, as Santander is writing to clients six months ahead of the end of their mortgage term end to offer them a lower rate and to waive the early repayment charge.
Sinclair (pictured) said: “Current estimates are that this market could be as high as £100bn per annum in addition to the £240bn gross lending that is cited in market commentaries.
“While some lenders have chosen to put borrowers through the advice process at remortgage, others have not.
“The former is most likely to trigger a revaluation of the property which in turn can affect loan-to-value. This affects rate, affordability and ultimately how much the borrower repays over the lifetime of the loan.”
He added: “There are a number of people who are not remortgaging and should. Once we get back this number we can identify who can’t remortgage.
“The clear intention of MMR is to have an advised market. We want clarity on whether that’s been achieved or not.
“When you get Santander breaking contracts six months early it’s worrying for both the intermediary and the customer.”
He went on to say he is not against product transfers per say but thinks it should be documented.
David Hollingworth, associate director of communications at fee free broker London & Country Mortgages, wondered whether this grey area accounts for a lack of remortage business.
He said: “There has been a lot of talk about how the remortgage market hasn’t burgeoned as much as anticipated but clearly this is part it.
“Having a feel for how much business is going down that route will give a better picture of how many people are getting advice across the market.
“If it’s not documented you can’t get a handle of how many people are getting advice. Some lenders are transferring products without checks and balances.”
He added: “I would think the regulator would want to get a full picture of consumer activity.”
However the FCA declined to comment and when contacted a CML spokesman said “competition and choice are important in the mortgage market, and we believe that they can be delivered by a variety of options for consumers”.
