Lenders dual pricing is still an issue despite claims that the differentials are narrowing, says Home Buyer System.
It has tracked the cheapest mortgage deal over two years on its sourcing system, using two generic examples based on the Council of Mortgage Lenders' average borrower statistics.
It found direct-to-lender deals have been consistently cheaper than broker products. 'The only way forward for mortgage intermediaries is to change their business models to enable them to research and recommend direct-to-lender products,' said managing director Richard Angliss.
He also believes brokers ought to charge the customer a reasonable fee for this service, with the customer still enjoying a considerable saving. 'Feedback shows that some IFAs and mortgage brokers believe that they cannot recommend direct-to-lender products because the lender will not supply a KFI. This belief is erroneous, and the FSA confirms that if an adviser has the ability to produce a KFI for a direct to lender product there is nothing to stop them doing so.'
Fixed rate deals also come under fire. They are becoming increasingly uncompetitive as lenders pass on the cost of wholesale borrowing.
According to new figures from mform.co.uk, the most competitive two-year fixed rate deal, ranked on a true cost basis, is a dismal 45th while the most competitive three-year fixed rate is just 20th in the overall league table.
Research from Spicerhaart Financial Services found long-term fixed-rate mortgage deals are increasingly dominating the market.
Those wishing to borrow on the value of a property rather than the purchase price are also more restricted. Until recently getting the benefit of a good value purchase within the borrowing hasn't been too much of a problem as some high street lenders have accepted a very short period of only a few days between initial purchase and re-finance.
'Due to the changed market conditions, this has become too high a risk for many high street lenders and as such, they have withdrawn this facility,' said Roy Winston, Chairman at Credit & Mercantile.
