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Do Comparison Sites Help the Average Mortgage Consumer
Kevin Mountford, head of banking at moneysupermarket.com )has again been making sure his PR department earn their money by claiming this week that 90% of mortgages are a better deal if applied for online directly with the provider. (Remember that his commission comes from visitors to his site clicking on the relevant links!)
These figures only refer to the headline rates that have been promoted and designed specifically for internet comparison sites by the banks themselves. Don’t be fooled – these sites serve a very useful purpose in making sure that customers have some idea of the different products that are available - but at the end of the day they simply display whatever information they are given by the media savvy advertising department of every large bank and building society in the UK.
It can be a laborious and confusing task to try and find the right mortgage deal and there is no substitute for independent advice. Yes of course it is a good idea to make sure you have a basic understanding of the types of products and interest rates available before talking to a mortgage broker but keep your personal circumstances in mind and remember that a mortgage is probably the biggest financial commitment you will ever make. A few hours of your own research is well worth it when you realise that choosing the right product and mortgage lender could potentially save you thousands of pounds over the whole mortgage term.
The best rate tables are exactly what they say ‘best rate’ and most mortgage applicants are never likely to be able to take advantage of these special deals. Customers may not have a large enough deposit, may have an adverse credit history, or they may simply not be able to apply in time.
Here is an example, this week HSBC launched a new 2 year tracker at 2.19% - cue big headlines and promotions across the financial websites. Take a closer look and you discover that the rate only applies if you have a 40% deposit and are able to make the application within two weeks, both factors make it highly unlikely that the majority of customers will be able to take advantage of this very well promoted product that unsurprisingly has been hitting the top spots of the comparison sites.
Draw your own conclusions about how to use the comparison sites!
3rd August – moneysupermarket withdraws its statistics
Following claims from comparison sites that the best mortgage deals are available by using their sites to approach lenders directly, the largest comparison site – moneysupermarket has withdrawn its report and admits that it did not take into account the number of broker led deals that are available at better rates.
Earlier in the week brokers were furious about the press release which was seen by most commentators to be a PR exercise rather than a piece of honest reporting.
The retraction and admission that the figures were skewed will be welcomed by brokers as will the statement by Kevin Mountford, head of banking at moneysupermarket.com “that ........... this should be seen as part of the shopping around process rather than the final word in mortgage products, as consumers who fail to shop around will no doubt miss out on the best deals available”
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