Mark Chilton, managing director for Purely Mortgages, said lenders were giving confused signals, as they chased new business with low rates, but lost the business they already had.
He said: “It’s becoming clear retention strategies are too muddled to stick at the moment and most customers are better off remortgaging.”
Simon Biddle, head of marketing at Infinity Mortages, agreed that retention schemes were only a good idea on paper: “It’s a case of simple inertia for those brokers who use them. In 2007, we will see retention products for what they are.
“Retention is a false god for advisers, but if they are going to do it then it is obviously because they think it is in the best interests of the client. However, there is a danger for the intermediary market. It could be killed by retention for the next two or three years. However, if lenders withdraw the products down the line, where does that leave everyone? It is a potential banana skin for the industry.”
However, Linda Will, managing director of Accord Mortgages, rebuffed the idea retention was a threat to brokers: “Retention schemes pay brokers for the work they do. If advisers have an audit trail showing we’re offering the best deal, how can it be bad for them? There’s a lot of scaremongering out there, but the end is not nigh. Rather it’s the end of lenders who think there is a constant churning in the market and losing business.”
Paul Fincham, spokesman for Halifax, also denied retention schemes were muddled: “Our customers have access to exactly the same deals as customers moving from another lender. It is a totally focused consumer proposition and intermediaries play a very important part in it. It’s about offering the best value to the customer and paying brokers a proc fee for the work they do.”
