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Lenders restrict cheap mortgage deals | 15/07/2010
Data from personal finance information service Moneyfacts showed by the end of last week that 50.9% of all mortgages were only available direct from a lender. Some 34.1% were accessible exclusively via brokers, while 15% were available via both channels.
In April 2007, 22% of deals were available direct-only, 25.8% via a broker-only and 52.2% via either route, according to data firm Defaqto
Martin Lewis, MoneySavingExpert.com creator, says: "The logical conclusion is fewer people will end up getting advice, meaning more will be at the mercy of lenders' spin on a very complex product.
"The worry is heightened by lenders taking a leaf out of the credit card industry's book, and beginning to impose hard-to-spot stealth fees and charges. The regulator, the Financial Services Authority (FSA), or its successor, needs to crack down on this cynical practice."
Brokers can still recommend a direct-only deal but they will not be paid commission (a large part of their income) and usually cannot apply on your behalf, meaning you do the paperwork.
The FSA says a 'whole of market' broker is expected to alert consumers if better deals are available direct from lenders, though it is under no obligation to point to a specific product.
'Whole of market' is an official term which refers to a broker that scours all the mortgages available to it, or a representative sample of available deals, which does not literally mean the whole of the market.
New broking model
Some previously fee-free brokers now charge to search all mortgage deals, though if they recommend a direct-only loan, you'll usually have to apply yourself.
Matthew Fleming-Duffy, from Abacus, says: "Whilst there have always been lenders that have not dealt with mortgage brokers, we are now experiencing a situation where most of the mortgage best-buys are simply not available to brokers.
"We must remember that brokers fulfil a valuable role in comparing deals available to you based on your circumstances."
Source: MoneySavingExpert