Bias shows up in mortgage advice
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Your support makes all the difference.BORROWERS are likely to receive biased and misleading advice on the high street about mortgages, according to the Consumers' Association magazine Which?.
In January, four researchers, two posing as existing home-owners and two as first- time buyers asked for advice from 100 banks, building societies and mortgage brokers in Cardiff, Edinburgh, London and Manchester.
Of the 72 advisers who recommended a mortgage nearly 80 per cent said an endowment was best, when a repayment would have been just as suitable.
Which? points out that mortgage lenders receive commission on endowment policies that can run to three or four figure sums.
Advisers spent twice as long on average talking about endowments as repayments and discussion of repayments was often little more than a way of showing the perceived strengths of endowment loans. Branches of Abbey National, the country's second largest mortgage lender and Barclays Bank were among lenders criticised for this.
A branch of Lloyds Bank in High Street Cardiff advised a researcher to cancel his endowment if it had been running for a few years. Barclays in Hammersmith, London suggested cashing in the policy when it exceeded what had been paid in.
'Both Barclays and Lloyds gave bad advice,' said Which? 'You get little return if you surrender a long-term endowment policy in the first five or so years.'
Which? is sniffy about Abbey National and NatWest Bank publicising their awards from Which Mortgage magazine.
'Despite claiming to look at service to customers, the Which Mortgage awards are based solely on the views of 100 mortgage advisers. Customers were not consulted at all.'
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