- Clear need for comprehensive advice for First Time Buyers
- Some lack of clarity over whether customers have received advice
- Very high general satisfaction levels from sample of over 600 borrowers
The research, which comes out only a year before the FSA takes over the regulation of mortgages, was conducted from a sample of first time buyers (FTBs), those taking out a mortgage to move house (Movers) and those looking to re-mortgage without moving house (Remortgagors). Each was asked to feed back on the sales process and advice or information provided when taking out their mortgage.
A finding which will have consequences for how the FSA handles regulation of the mortgage market is that only 6% of FTBs said they had a good understanding of mortgages, and nearly half only some understanding, with the rest saying they ‘didn’t know much at all’. FTBs, in particular, need the ‘safety net’ of high quality professional mortgage advice.
Significantly, the survey results indicate some customers are confused about the level of service they have received – whether advice or merely information – with potentially some customers thinking that they have been given advice on product choice within an information-only sale, contrary to Mortgage Code guidelines.
MCCB is considering these results carefully and will discuss its responses and findings with the FSA. MCCB has concerns that the FSA’s proposals for the use of ‘scripted questions’ in non-advised sales could ‘blur’ the boundaries between the different levels of service provided by a firm and lead some customers to believe they had received a form of advice or recommendation.
One of the many interesting findings from the study of over 600 mortgage borrowers was the fact that of those who responded, 23% were FTBs, 36% were movers, but the biggest group at 41% were remortgagors. This last figure highlights the increasing numbers of homeowners re-mortgaging to get better deals or release equity from their homes.
The MCCB was pleased that only 3% of respondents indicated that they had not received a ‘You and your mortgage leaflet’ from their mortgage intermediary or lender. This is the information leaflet published by the MCCB to inform and guide mortgage buyers about the protections under the Mortgage Code and what they should expect from their intermediary or lender in the mortgage sales process.
Borrowers in general are very satisfied with the service they receive from their mortgage lender or mortgage intermediary. As many as 95% of respondents felt that the mortgage salesperson did a good job of finding a mortgage that suited their needs, with 93% stating that they understood the reasons why a particular product was recommended.
The study found that a large majority of customers are satisfied with the mortgage information provided by their lender or intermediary. It should be noted, however, that there are specific areas where information provision could be improved – for example, on the implications of early mortgage repayment and any potential charges resulting.
One in five respondents reported using the Internet to find out about mortgages; and a quarter (25%) used newspapers and magazines. This implies that there is a degree of self-education used and personal research conducted alongside intermediary or lender advice.
Luke March, chief executive of MCCB said:
“As the mortgage market in the UK is worth around £250 billion per annum and more than two million mortgages are taken out every year, it is important that there is complete clarity when mortgage advice has been provided, especially to meet the needs of first time buyers. This data was collected to build on the information obtained via the compliance monitoring visits of our MCCB inspectors, and we have identified areas of high consumer satisfaction, along with areas where we will work with intermediaries and lenders to improve.”
