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Mortgage Lenders: the good, the bad, and the ugly

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The annual Which? mortgage lender satisfaction survey results are out, revealing that on average we are 4% more satisfied with our homelender than we were last year. Actually, this equates to an overall Which? ‘satisfaction index’ rating of 62%, so still some way to go for many lenders.

The lender with the highest Which? score this year was First Direct (last year’s winners) with a whopping 91%, trailing the pack were Halifax and Northern Rock with 45% and 47% respectively.

The council of mortgage lenders hailed the result (a 4% improvement to 62%) as a result of ‘lenders…working hard, under very challenging market conditions, to communicate effectively with their borrowers and treat them fairly’. CML Director General Michael Coogan did however caution that results were based on a fairly small sample of borrowers per lender.

But how much importance do we place on service? Would you pay an extra 0.5 % interest on your home loan for 25% better service? I wouldn’t, but then I wouldn’t stay with a lender that treated me badly either – so maybe it’s more about keeping customers than attracting new ones.

But then with many households finding themselves benefitting from low interest rates – how much ‘customer service’ do you really need from your lender whilst the going is good? The direct debit goes out – everyone’s happy.

Standard Life were not included in the survey, but my experience of customer service with them has not been good. Last time I needed them I was in Australia and it was impossible to call them on any number advertised on the website and you couldn’t send a message via the website outside of UK opening hours to arrange a call back. So much for the web providing a 24/7 service culture. Furthermore they released their ‘Freestyle’ mortgages with no valuation or legal fees for remortgaging – great! – except they’re not availble for existing customers. In fact when I contacted them about 6 months ago I was told there were no remortgage deals at all for existing customers – yet their website proclaimed great deals for those looking to switch.

Having worked in the commercial function of a mobile phone group for 5 years I know this game well – chasing new customers at the expense of your loyal customers who you then lose to your competitors’ offers. Switch to us – get a free whizz-bang phone. Been with us for 10 years, paid your bill on time? Have a free brown nokia phone case or go somewhere else.

Maybe First Direct have got it right – great customer satisfaction and sensible offers such as a 2 year fixed rate mortgage at a pay rate of 3.94% and £1000 fees. That doesn’t seem too bad to me – but will I have to switch again in 2 years to get a better offer, or will they look after me?

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