Commenting on the report’s findings, David Bitner, head of product operations for The MarketPlace, says: "Miles has appeared to identify the key factors that are driving the UK mortgage market at the moment, alongside its current drawbacks. Crucially he highlights the market’s dynamic and innovative nature allowing borrowers extensive choice and value for money.
"We support Miles’ call for increased transparency and enhanced consumer advice, however, there are crucial observations worth making on two of his key recommendations."
1) Lenders make all their deals available to both new and existing borrowers
This would lead to fairer pricing for many borrowers, however, some lenders would be unable to continue with their current pricing strategies. This would have several big ramifications:
* It would force many lenders to drive up rates because it would too expensive for them to offer all borrowers the kinds of competitive deals they currently offer to attract new customers.
* It would mean longer term fixed rates wouldn’t look as uncompetitive as they do at present — and as Professor Miles would hope, encouraging increased take-up. Whether take-up would rise substantially, though, is rather doubtful.
* It could have an impact on profit margins of some of the UK’s biggest lenders. It may lead them to review how they market deals in the future.
* It would also mean new borrowers and remortgagers wouldn’t have access to the kind of low rate deals that are currently available, making it even harder for first time buyers to get on the property ladder.
2) Mortgage advisers to help people assess risk
The MarketPlace supports Professor Miles’ second recommendation for mortgage advisers to help borrowers assess risk and the impact of interest rate movements. Mortgage advice is vital in ensuring borrowers are aware and fully understand their options. We would argue though, that advisers already do this as a matter of course. Certainly at The MarketPlace, we ensure borrowers understand all the options available to them and the impact of potential interest rates movements to help them decide which mortgage is best.
