Who really influences your mortgage clients?

01/04/2014 By Tony Wornell

Many markets are driven by social influence – the way we feel, think and act is strongly influenced by what other people say and do. A study from BVA BDRC has shed some light on the extent to which social influence drives the mortgage market.

Among consumers who had recently arranged a mortgage, two-fifths cited intermediaries as a source of information. A fifth said they visited potential lenders’ branches, while another fifth used comparison websites. 16% went to lenders' own websites for information.

Asking friends, colleagues or family for advice, however, was a less popular method for gathering information, taking joint fifth place alongside financial advice websites.

The study showed that more formal sources of information and advice were the primary drivers of the market. There was some evidence of social influence on the market, but not a lot. 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.

These were defined 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 showed their influence network extended 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.

On balance, however, mortgage influentials were more knowledgeable about mortgages and changes to the mortgage market such as the Mortgage Market Review. They were also more confident about mortgage issues and engaged with and actively managed their own mortgages more. Additionally, they tended to be better off, financially. Perhaps as a result of their knowledge and engagement, they were also happier with their current deal from their provider.

In all, mortgage influentials emerged as positive role models. Their influence appeared to be driven by successful outcomes, such as being happy with their mortgage situation.

Overall, then, it appears 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.