Some lenders are not distributing mortgages through intermediaries

People looking to remortgage are finding it harder to secure a new mortgage than they have done for many years. And if they are successful, they are likely to be paying more for it in both rates and fees.

One of the lesser publicised reasons for this is that a number of lenders have temporarily stopped accepting business through intermediaries. This is because lenders have only limited amounts of funding available and are therefore concentrating on lending to borrowers of higher credit quality than in the past.

For the prospective borrower this presents something of a quandary. If they go through a broker they may not necessarily be getting access to the whole market. If they do their own research they will have to put a lot of effort into it.

David Black, Principal Consultant, Banking at Defaqto said: "There's nothing to stop brokers recommending a ‘direct only' mortgage but unless the broker charges the borrower an advice fee they won't earn any commission on the mortgage. To do this they could help the borrower fill out all the paperwork and then get the borrower to submit the application".

In the light of this situation, HSBC's Rate Matcher promise, available from 14th April, is an interesting development. As HSBC do not offer their mortgages through intermediaries, people wishing to access an HSBC mortgage will have to contact HSBC direct. For five weeks, HSBC will match rates as low as 4.54% for two years for people with fixed rates maturing before 30th June 2008. The maximum loan it will offer is £250,000 (although borrowers can top up above that amount with another HSBC mortgage) and it won't lend above 80% Loan-to-Value. HSBC will also charge a variable arrangement fee which, for the majority (72%) of borrowers will be no more than £999.

David Black said: "The reduction in supply of mortgages generally will mean that people seeking mortgages will have to carry out more extensive research into what is available. Whereas before the credit crunch, mortgage lenders sought out borrowers, now the boot is on the other foot. Unless people are prepared to go to considerable effort to secure a mortgage, they may not find the best deal."