Is there a lack of education around mortgages?

Education is important in any field, although perhaps no area more so than within mortgages, as a property is likely the largest purchase you will make in your lifetime.

The need for knowledge and understanding on the topic is paramount for both the consumer as well as the adviser. As such, Mortgage Introducer reached out to several brokers to discuss where education may be lacking.

Educating brokers

David Robinson (pictured), co-founder at Wildcat Law, said inadequate adviser training is coming home to roost.

“For too many years a lot of mortgage advisers have actually been mortgage facilitators; advice has been limited to only which provider will provide the cheapest rate,” Robinson said.

He questioned how many advisers understand interest rates and historic movements, and how many have helped to educate their clients so they recognise the real risks involved in fixing for the short-term versus the long?

“The same advisers moaning about mortgage rates are the ones who complained about stress testing rules; as an industry we must do better,” he said.

Undoubtedly, Robinson said there will be many families in the coming months and years who will find their mortgages unaffordable. This is because, he believes, they stretched themselves too far to buy their dream home, and no-one had an honest conversation with them regarding the real risks they faced.

Austyn Johnson, founder at Mortgages For Actors, said CeMAP does not teach brokers how to do business or treat clients properly to get the best outcomes.

“CPD is pretty much just provider product knowledge; working on the front lines doing the complex labour is where you learn so much,” Johnson added.

Working with experienced advisers, he said, is where you learn how to treat clients well, and going out and doing the job is where you learn what and how to do it.

Johnson believes there should be more training in the way of being a decent broker and listening to what clients want or need.

Daniel Hobbs, managing director at New Leaf Distribution, does not think brokers generally lack education, but he added that there is definitely work that can be done on how brokers communicate their message to clients.

“It is vitally important with Consumer Duty now around the corner, that brokers think about the way they interact with their customers, from managing expectations throughout the sales process to providing after-sales customer service and support,” he added.

Educating consumers

Molly Markey, managing director at Finanze Capital, believes that despite the regulated nature of the mortgage market within the UK, there are still issues. While the regulations aim to ensure consumer protection, Markey said some individuals may lack education or understanding about mortgages.

“The complexity of the mortgage process, including the terminology, various types of mortgages, and associated costs, can make it challenging for individuals without prior knowledge or experience,” she said.

To improve this, Markey said, we could look to go ‘back to basics’ and increase the requirement for financial education within schools.

Further regulation, she believes, could also be put into place via the Financial Conduct Authority (FCA) to ensure that lenders and brokers are providing clear information to borrowers, including explanations of the different mortgage products available and the risks involved.

“Brokers can look to ensure they are continuously educating themselves via seminars, workshops and even partaking in professional certifications such as CeMAP,” she added.

Mike Staton, director at Staton Mortgages, said there is a widespread misunderstanding of the mortgage market in the UK.

“I have contacted numerous schools, offering sessions for students on mortgage advice, budgeting and saving but with very little response; it is like schools do not care if their students learn these valuable life skills as long as they can get through Ofsted inspections,” he said.

As for the mortgage industry itself, Staton said it has become far too easy for people to become a broker.

“CeMap should not be enough, some corporate organisations allow mortgage advice to be given after only completing CeMap level one, how can this be possible when two and three are mortgage specific?” questioned Staton.

In addition, Staton said a lot of networks have become ‘very lazy’ post-COVID, replacing continual face-to-face training with recorded videos that lack interaction.

“Networks are now also conducting Zoom calls where you are muted and cannot ask questions, and 5,000-word emails that you are expected to absorb as if you were Charles Xavier; the mortgage industry is in need of reform,” he said.

Do you believe there is a lack of education around mortgages? Let us know in the comment section below.