Anyone that is not now aware of the chaos that has engulfed the mortgage lending sector in the UK must have been asleep for the past six months. Since the onset of the global credit crunch last summer the UK’s mortgage lending sector has gone from bad to worse, with the effects of the global credit crunch having a profound effect on mortgage lending throughout the nation.

Many dramatic changes have taken place in the world of UK mortgages, and they have not spelled good news for the consumer. Mortgage lenders have found that securing finance to fund their mortgage lending activities has become increasingly expensive and difficult, and because of this they themselves have had to take steps to cut back on their lending. In order to minimise the impact of increased costs and difficulties in getting finance, lenders have taken many mortgage products off the shelves altogether, hiked up interest rates on mortgages despite the three recent base rate cuts, increased arrangement fees and deposit requirements, and tightened their eligibility criteria.

With access to mortgages severely restricted and affordability extremely limited for most consumers, officials have stated that it has now become more important than every for buyers – particularly first time buyers with little or no experience of the mortgage industry – to seek assistance and advice from professional mortgage intermediaries, such as mortgage brokers and independent financial advisers. Recent report have suggested that first time buyers are already going through brokers more because they are confused over which mortgage to opt for from the limited choice left, and are uncertain about being able to get a good deal on their own.

The number of first time buyers taking out a mortgage through a broker has risen over recent months, going from 72.8% in the first quarter of last year to 82.5% in the first quarter of this year. Mortgage brokers have stated that this rise shows that whilst the mortgage market may have been hard hit by the credit crunch brokers still have access to a wide range of competitive deals.

However, the Financial Services Authority has been putting pressure on brokers to ensure that they provide increased clarity to consumers about their best chances of getting the most competitive deal, stating: “For example, if a customer goes to a whole of market intermediary, and the intermediary recognises that, in current market conditions, there may be more competitive products in the market other than those available to the intermediary, that may be of interest to the customer, we think that there must be acknowledgement of this.”

An official from the Association of Mortgage Intermediaries said that consumers can really benefit from taking advice, stating: “Intermediaries are able to identify the most suitable product for the consumer at a competitive price. Analysis of consumer attitudes shows they value this advice much higher than that provided by lenders.”

He added: “Advisers know their clients and use this insight and their knowledge of the market, to identify the most suitable and most price competitive products for the client.”

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