Remortgage  

Warnings of remortgage advice gap

Warnings of remortgage advice gap

The value of residential product transfers is set to hit £150bn by the end of 2018 but an "advice gap" in the remortgage market remains, a conveyancing firm has warned.

In figures released by LMS today (December 21), 1,155,000 homeowners will have switched products with an existing provider over the course of this year - equivalent to more than £150bn of mortgage debt refinanced internally.

However, LMS predicted 610,000 of the transfers will have been completed on an advised basis, with 47 per cent of product transfers taking place on an execution-only basis without advice.

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With almost half of all product transfers being unadvised, LMS has warned this is resulting in an "advice gap" in the remortgage process when compared with the increase in advice across the wider mortgage market.    

According to LMS data, the number of non-advised mortgage sales dropped significantly in the decade since the financial crash, falling from 35 per cent in the second quarter of 2008 to 3 per cent in the second quarter of 2018.

The conveyancing firm suggested another 44 per cent of product transfers should therefore be advised.

Nick Chadbourne, chief executive of LMS, said the research suggests over the course of the year 545,000 borrowers will have undertaken an execution-only product transfer.   

He said: "If you compare that to the wider mortgage sales market, it appears to be about 510,000 too many.

"Ideally, we would like to see more borrowers consulting brokers even if, on the surface, it doesn't seem that much has changed since they secured their last mortgage."

Mr Chadbourne said while an execution-only product transfer might look like the easiest route to remortgage, it is still worth seeking advice.

He said: "It is an opportunity for borrowers to consult a broker and search the market more fully - even a 0.25 per cent saving on a £150,000 mortgage could save borrowers a meaningful amount of money over the course of the deal.

"The product transfer advice gap represents a missed opportunity for borrowers."

rachel.addison@ft.com