The value of residential product transfer is set to hit £150bn by the end of this year, but an “advice gap” in the remortgage is still prevalent, conveyancing firm LMS has warned.
In the figures released today, LMS revealed 1,155,000 homeowners will have switched products with an existing provider over the course of 2018, which is the equivalent of more than £150bn of mortgage debt refinanced internally.
Despite this, the firm has forecast that only 610,000 of those transfers, worth £80bn, will be conducted on an advised basis. This means that, throughout the year, approximately half (47 per cent) of product transfers will have taken place on an execution basis, without advice being sought.
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 the data published by LMS, the number of non-advised mortgage sales dropped substantially in the decade since the financial crisis, plummeting from 35 per cent in second quarter of 2008 to just 3 per cent in the second quarter of 2018.
As a result of this, the conveyancing firm suggested that another 44 per cent of product transfers should therefore be advised.
Commenting on the findings, LMS chief executive Nick Chadbourne: “Our research suggests that over the course of the year, 545,000 borrowers are going to have undertaken an execution only product transfer. If you compare that to the wider mortgage sales market, it appears to be about 510,000 too many.
“In a rising rate environment, consumers appear to have opted for the perceived quickest route. But a mass volume of products selected without advice represents a significant gap in the amount of advice borrowers are getting when they remortgage.”
Chadbourne added that, “ideally”, LMS 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."
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