Homebuyers are using mortgage brokers recommended to them by estate agents in the false belief it would give them a better chance of securing the property they want, new research has revealed.
A survey of just under 2,000 mortgage holders found almost half (44%) of homeowners who had used a mortgage broker selected one recommended to them by, or linked to, an estate agent. Over a third of those (37%) said they felt pressured by the estate agent to do so.
Boon Brokers, an independent mortgage broker based in Norfolk and Suffolk, which conducted the research, said one in 12 mortgage holders (8%) believed using an estate agent’s recommended broker would give them a better chance of securing the property they wanted.
What’s more one in 25 (4%) said the estate agent openly implied that they would get preferential treatment if they were to do so.
This figure rose to one in 10 in the 18 to 25 age category, suggesting first-time buyers in particular may be being targeted. The survey revealed 74% of 18 to 25s who had used a mortgage broker admitted it was one linked to the estate agent.
Many estate agents have their own in-house mortgage brokers or have links to a third party, and often receive commission on any mortgages arranged, whilst a fee is charged for the advice given.
Although it is legal for an estate agent to let customers know a service is available, they are not allowed to give any preferential treatment to those choosing to act on the recommendation.
Gerard Boon, founder and partner at Boon Brokers, said: “We regularly hear from homeowners who say they have felt pressured to use an estate agent’s mortgage broker and some have even been told it would help them get a better deal on the house they wanted, or that it would put them at the top of the list of potential buyers.
“Obviously, these practices are totally unacceptable and we would hope that most estate agents would be as horrified as us to hear these stories.
“Getting independent advice is always a good idea when making financial decisions – particularly one as big as getting a mortgage. But we advise that home buyers should ensure that mortgage advice is truly independent from a broker who has whole of market access and who will not charge for advice. All brokers receive a procuration fee from a lender once a mortgage application has completed, so we believe that there is no need for additional fees to be charged to the client.”
Another potential issue highlighted by the research was the requirement for people to share their personal and financial information with multiple mortgage brokers.
The study revealed that on average people dealt with three different estate agents when buying their last property, meaning if they needed to liaise with mortgage brokers for each agent, they would be sharing their personal information multiple times.
One in four people (24%) admitted they were nervous about sharing their personal and financial information so widely.
