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Intermediaries proactive in encouraging customers to review mortgage options

  • Nine out of ten intermediaries maintain mortgage maturity records
  • 83% reach out to customers as end of their product approaches
  • Intermediaries say 43% of customers opt for a switch product with their existing lender

Mortgage intermediaries play an important role in encouraging customers to review their options and identify opportunities to secure a better deal as their initial mortgage term comes to an end, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index, based on interviews with 200 mortgage intermediaries.

The survey found nine out of ten intermediaries keep a record of customer maturity dates allowing them to proactively reach out to discuss remortgage options at the appropriate time.

In terms of contact, half of intermediaries said they always contact customers as they approach the end of their current arrangement and one third said they usually do so.

Intermediaries assist customers to review a range of different options available to them, including switch products on offer from their existing lender and remortgage products available from alternative providers.

On average, intermediaries said that 43% of their customers chose a product switch with their existing lender rather than remortgaging when their mortgage reached maturity.

Interestingly, two thirds of intermediaries said they would never or only rarely recommend a product switch at a higher rate, while one third said that they would do so in certain circumstances for the benefit of convenience.

The findings come at an interesting time as the FCA completes its current Mortgage Market Study, due to report at the end of 2018, looking at consumers’ ability to make effective choices when selecting a mortgage.

In an interim report in May, the FCA pointed to high levels of consumer engagement in the mortgage market, with over three quarters of customers switching to a new mortgage deal within six months of moving onto a reversion rate.

The final FCA report is exepcted to identify ways in which technology can enhance customer choice and the FCA has announced an initiative to improve the experience of ‘mortgage prisoners’ - those left servicing a mortgage on a relatively high reversionary rate because market-level changes to mortgage affordability left them unable to switch to a better deal.

John Heron, Managing Director of Mortgages at Paragon said:

These findings demonstrate the important role intermediaries play in encouraging competition and choice in the mortgage market, offering a proactive prompt to customers to review their options at the end of their current deal. What’s interesting is how intermediaries encourage customers to weigh the benefits of a switch product with an existing provider against a remortgage with a new lender when deciding what action to take.

View the full FACT Q2 2018 report

07 August 2018

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551