Brokers have questioned Halifax’s decision to pay more cashback to direct customers than those going through brokers.
This week Halifax announced it would pay £750 to direct first-time buyers, homemovers and remortgage customers.
Those going through brokers will only get £500.
Halifax says this is fair because the brokers can access cheaper rates on the £500 cashback deals than direct customers can on the £750 deals.
Despite this, brokers that spoke to Mortgage Strategy say the extra cashback is unfair and can disadvantage them and their customers. All praised Halifax’s general approach to intermediaries.
Integral Private Finance Services managing director Paul Smulovitch says: “I am very unimpressed, I feel the broker is being disadvantaged.”
Xpress Mortgages Rachel Lummis says: “This is most unfair and penalises those customers who want to use the services of a mortgage adviser. It is taking away consumer choice.”
Coreco director Andrew Montlake says: “We always understand that sometimes it is difficult for lenders to get footfall through an expensive branch network that needs to be supported, but it seems much fairer for customers to be able to access the same products whether they choose to go direct or utilise the expertise of a broker.”
But some brokers were more understanding.
London Money founder Martin Stewart says: “Lenders have every right to market to their customers how they want to, it’s the nature of the beast.”
A Halifax spokeswoman says the cashback deal is fair because brokers can access cheaper rates from Halifax than customers that go direct.
An example would be a rate of 1.55 per cent for direct customers picking a two-year loan at 60 per cent LTV, while broker customers can get a 1.43 per cent rate for the same loan.
She adds: “This means the two promotions are closely aligned.
“We regularly review our products including promotional campaigns to ensure they continue to add value and meet the needs of our range of customers.
“We work closely with brokers, using their regular feedback to help shape our policies, enhance service and make it easier for them to business with us.”
However, many brokers say they would rather have the option of extra cashback than the cheaper rate, depending on mortgage size.
Protection and Investment adviser Martin Fairchild says: “If it’s a bigger mortgage then I’d prefer the better rate. If it’s a smaller mortgage, then cashback.”
Martin Stewart also said he would like access to the extra cashback depending on mortgage size.
But some brokers said they would prefer the cheaper rate than the extra cashback.
Smulovitch says: “I would rather have the cheaper rates, as it works out more economical for the client.”
In most cases, the deals available with other lenders, will work out cheaper than Halifax, with our without cashback, unless of course, Halifax suddenly bring out to market leading rates. I use Halifax more for their niche areas, than anything else and also because the BDM I have is excellent.
I guess it is a pity, that the powers that be, didn’t run this by the broker community, before launching it. In my view it is sensible to compare direct products, when using the sourcing systems, to ensure you know what is out there, for direct deals too. On most sourcing systems, it shows the direct products, even though a broker cannot access them. If a lender does bring out a market leading direct deal and brokers advise their clients to go direct, they will soon get swamped and unable to cope. This will ultimately lead to such deals being withdrawn anyway.