by Mark Johnston
The rise in direct mortgages has led the Association of Mortgage Intermediaries to look into revamping the industry through a national advertising campaign. The Association of Mortgage Intermediaries has estimated that a adverting campaign to promote the value of professional mortgage advice could cost up to £2 million per year.
Robert Sinclair, the director of the Association of Mortgage Intermediaries was speaking at the Mortgage Business Expo when he revealed that the mortgage advisors trade body had looked into the cost of running a campaign. There are around 10,000 mortgage intermediaries offering advice in the UK so the £2 million campaign would cost each of them around £2,000 each per year.
During another talk at the Mortgage Business Expo, business management consultancy firm Telos Solutions asked mortgage lenders if they would be willing to contribute to the high profile campaign. Colin Snowdon, Aldermore chief executive of residential mortgages said he thought that some intermediary lenders may be willing ton contribute but thought that some of the larger banks may not.
The idea to create a large scale advertising campaign to promote the benefits of mortgage advice may well be an attempt to breath life back into the struggling industry.
The invent of the internet and subsequent price comparison websites have in recent times taken the place of brokers.
More and more people are bypassing mortgages brokers and going direct to lenders, whether its via the internet, over the phone or popping into their local branch of their bank or building society.
Recently the Council of Mortgage Lenders (CML) revealed that mortgages are at a ten year low. To attract new customer, lenders are cutting out the middle men and offering their products direct to borrowers. This keeps rates lower for customers and provides the lenders with a lot more profit. This has created a conundrum for would be borrowers, do they visit a broker and get professional advice or hope for a cheaper deal and decide themselves?
Michelle Slade from Moneyfacts said: “The proportion of business done through brokers has dropped significantly in the last few years and this shows no sign of abating. In fact, many of the best mortgage deals are available direct from lenders rather than through a broker,”
Which? the consumer focused company which offers independent product and service reviews has just got FSA approval to offer mortgage advice to its members. The consumer group decided to set up the service, which is due to be launched by the end of 2010, because its members wanted professional advice that they could trust.
The service will provide its members with information and advice on the entire market including those mortgages that are only offered directly from lenders. The advisors will be paid a salary instead of working on commission so that their members will get impartial and trusted advice.
Chris Gardner, Which? commercial director said: “Choosing the right mortgage is an important and complicated decision. We believe that this service will give our members access to the advice they want.”
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