PROSPECTIVE NEW home-owners buying houses through mortgage brokers are facing new costs as brokers look set to introduce new fees.
The Professional Insurance Brokers' Association (PIBA) said that the new fees were necessary to make up for their commissions being cut by lending institutions due to the credit crisis.
With broker commissions being halved in some cases, independent advisers have no option but to charge for expert financial advice, the association's conference was told yesterday.
"Some of the lenders are saying that in the UK banks are only paying 0.35 per cent, but there are two facts about the UK - the workload involved in the mortgage is a lot less and the UK brokers charge fees," said Diarmuid Kelly, chief executive of PIBA.
"Here, the workload on a mortgage has not diminished but expanded because the credit crisis means more cases involve a degree of negotiations with lenders. So the deal is more complex, and if the commission has been cut by the lender then there is no alternative but to charge the appropriate fee."
In light of the current changes, Mr Kelly said "customer-agreed remuneration" was the appropriate policy. This would provide home buyers with up-front and transparent costs.
"The commission wasn't a holiday fund," he said. "It was payment for work done over a four, five or six-month period. It was payment for the range of advice given to the customer."
The conference was told by PIBA chairman Jack FitzPatrick that the onus was on consumers to educate themselves to the differences between partial and independent advice.
"There is an existing legacy of unwarranted trust in the traditional lending institutions, which are extremely powerful. This has led to an unwillingness on the part of many consumers to pay for independent advice."
PIBA is in talks with a number of lenders about introducing its own broker-branded mortgage products to the market.
Mr FitzPatrick said the association was hopeful of introducing its own products this year.
He emphasised that the brokers' understanding of the market left them well-placed to devise products which would suit particular borrowers.
Meanwhile, another lender selling mortgages in the Irish market through brokers has introduced changes to its lending criteria.
The UK's seventh-largest building society, Leeds Building Society, which had mortgage balances totalling £120 million (€151 million) in Ireland at the end of last year, has raised the margin on its Irish tracker mortgage by 0.35 per cent, from 1.1 per cent to 1.45 per cent over the European Central Bank base rate of 4 per cent.
This brings the rate from 5.1 per cent to 5.45 per cent.
