Fintech lender chief details the ins and outs – but what do brokers think?
Gen H has announced its latest product switching range for intermediaries, which allows brokers to earn a 0.25% proc fee for each client they help on to a new rate with the lender.
Mortgage Introducer spoke with the lender to undercover why it has chosen now to introduce the range, while brokers also weighed in on the announcement.
Gen H 0.25% proc fee offer
Pete Dockar (pictured), chief commercial officer at Gen H, said the firm’s broker partners are central to achieving its mission, which is making homeownership accessible to everyone.
“Early adopters of Gen H in the intermediary market now have clients coming up for renewal, so, timing-wise, it was important to get this new range launched to make sure our broker partners have access to all available options,” he said.
Dockar added that Gen H also believes this is a good time given how many homeowners are looking to lock in a product switch, rather than remortgage in this turbulent economic climate.
“We know this range might not be leading the pack of other lenders, but we are treating it as a necessary first step in the right direction,” Dockar added.
Which products are proving popular?
So far, Dockar said the field has been rather evenly split in terms of product take-up. Customers switching to two-year fixed rates, Dockar said, believe that by 2025, interest rates will have fallen. Meanwhile, he said customers switching to five-year fixes are less certain that rates will fall in the medium term, which reflects concern that the Bank of England’s Monetary Policy Committee has been too soft on inflation to date.
“However lately, interestingly, we have seen a real step up in three-year rates, which suggests a growing cohort of customers choosing to hedge their bets between these two positions,” he said.
Everyone’s circumstances are different, though, and Dockar added it is important for customers to work with their brokers to reflect on their circumstances, get expert advice, and select the right product for them, whether that is with Gen H or another lender.
Brokers’ reaction
The Gen H offer has received a mixed response among brokers, however.
Rhys Schofield, brand director at Peak Mortgages and Protection, said when the UK’s largest lender, Lloyds Banking Group, pays a 0.4% proc fee, there is not really an excuse to pay less.
“While the application process is potentially more straightforward, a broker still has to prepare a case to show they have given suitable advice, as well as pick up the liability if it goes wrong,” he added.
Schofield believes that Lloyds Banking Group’s offering should really be the starting point in terms of rates for the industry.
Jonathan Burridge, founding adviser at We Are Money, agreed with Schofield and added that lenders “need to wake up to the true cost of advice on product transfers.”
“Broadly speaking, the same process is followed regardless of whether it is a remortgage or product transfer - we have to engage with the client, update documentation and review the market for both,” he said.
If a product transfer is the best advice, then Burridge said brokers are earning almost half the amount for doing the same work.
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management, agreed with Burridge that product transfers usually pay around 50% of the normal new business proc fee.
“Many brokers are aggrieved by this as a good chunk of the work done is the same whether the end result is a full remortgage to a new lender, or a product switch with the current lender,” Taylor-Barr said.
However, he added that it can also be argued the post-advice process is much quicker; as any application is minimal, there are no supporting documents to submit and no underwriters and solicitors that need to be chased.
What are your views on proc fees for product transfers? Let us know in the comment section below.
