There has been a rise in the number of people turning to mortgage brokers for guidance, with many customers unsatisfied with their lenders.
Deciding whether to navigate the mortgage market solo, or enlist the help of a qualified broker, is a major step when it comes to buying or remortgaging a property.
In recent times, with interest rate hikes making borrowing much more expensive than it was a year ago, the market can feel more daunting than it was during the period of ultra-low interest rates many had become accustomed to. And it seems some lenders aren’t offering as much support as customers would like.
New research from Butterfield Mortgages has found that less than half (44%) of customers are satisfied with the support and communication they received from their mortgage provider since the start of 2022, including the period where interest rates began to climb.
Meanwhile, two thirds (66%) of those surveyed said they believed lenders should offer greater flexibility in the current climate. This has led to a rise in the number of people considering using mortgage brokers, with 50% of respondents saying they are more likely to use one to help them understand the products available.
Branching out for a better deal
Butterfield’s research also found that more than a third (37%) of mortgage customers are now more likely to look at smaller, independent and specialist lenders as opposed to traditional high street options and the big banks.
Alpa Bhakta, CEO of Butterfield Mortgages, said: “Over the past year, mortgage customers have had to grapple with a string of consecutive interest rate hikes, which is evidently creating challenges for many.
“With interest rates once again on the rise, it is increasingly important that mortgage customers feel supported by their lenders and that we, as an industry, are doing everything we can to provide the right levels of guidance, communication and flexibility amid the ongoing economic challenges.”
The latest data from Better.co.uk indicates that the average rate for a two-year fixed rate deal is currently 6.41% across all borrower types. The three-year rate average is now 6.06%, while to fix for five years the average rate is currently 5.97%.
Of course, within these averages, there will be variations depending on the lender, any additional incentives or deals available, and your individual circumstances.
Pros and cons of mortgage brokers
During uncertain times, and with most forecasts indicating that rates are unlikely to fall significantly in the short-term, navigating the mortgage market and securing the best deal is more important than ever.
Often, buyers and investors with more complex needs tend to use mortgage brokers to help them with their application. For example, those who are self-employed, or portfolio landlords, may use mortgage brokers to help them access the market.
One major advantage of using a broker is that they can save you time, as you will only need to make a single application, rather than potentially multiple ones to various lenders. They can also more easily scan deals across the whole market.
Mortgage brokers are also experts in the field, and can offer some much-needed expertise in the buying and financing process, which many find useful. Having knowledge of the market might mean they can find the best deal for an individual’s personal circumstances and needs.
Some mortgage brokers are able to secure more favourable rates than a borrower would if they went straight to the lender, although this is not always the case. They may even be able to reduce your product fees.
On the other hand, some lenders do not open up their offers to mortgage brokers and only offer them directly to borrowers, so it can still be worth checking you are getting the best rate.
Mortgage brokers also typically charge for their services, and this tends to be either a fixed fee or based on the total loan amount. For many borrowers, the benefits of using a broker make the fee worthwhile, but it will depend on the customer’s circumstances.
