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Who really influences your mortgage clients? – BDRC

by: Tony Wornell
  • 01/04/2014
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Who really influences your mortgage clients? – BDRC
Many markets are driven by social influence – the way we feel, think and act is strongly influenced by what other people say and do.

So, we wondered, to what extent does social influence drive the mortgage market?

Among consumers who had recently arranged a mortgage, intermediaries were the most frequently mentioned source of information (39%), followed by branch visits to potential lenders (21%), comparison websites (20%) and lenders’ websites (16%).

Asking friends, colleagues or family for advice was down in joint fifth place (11%), alongside financial advice websites.

So, there is some evidence of social influence, but not a lot. More formal sources of information and advice are the primary drivers of the market. The exception was among potential first-time buyers, where a separate survey found that ‘family’ was their primary source of information and advice.

Most often, family meant ‘parents’, so the Bank of Mum and Dad has a voice as well as a pocket.

More generally, among a cross section of 1,000 mortgage holders across Great Britain, we estimated that 9% could be classified as mortgage influentials.

We defined these as borrowers who were asked for information and advice about mortgages by at least two of these groups; their children, other family/relations or friends/colleagues. Comparison with the average mortgage holder shows their influence network extends well beyond their own household too.

By looking at the characteristics of these mortgage influentials, we can begin to see the source and nature of their influence. They are not radically different to the average borrower – it is more a case of light and shade – but on balance mortgage influentials are:

– Better off, financially
– More knowledgeable about mortgages
– More knowledgeable about changes (e.g. the Mortgage Market Review)
– More confident about mortgage issues
– More engaged with their mortgage
– More active in managing their mortgage (e.g. overpaying and switching deals)
– And perhaps as a result, happier with their current deal and their current provider.

In all, mortgage influentials emerge as positive role models. Their influence appears to be driven by good outcomes, such as being happy with their mortgage situation, not just their knowledge of mortgages.

So, overall, our view is that social influence is a more limited force in driving the mortgage market than it is in many other consumer markets. But it does seem to be a force for good.

Tony Wornell is director of BDRC Continental

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