10 Oct 2017

Real estate agents linking up with mortgage brokers

9:57 am on 10 October 2017

A consumer lobby group wants an investigation into the growing ties between mortgage brokers and real estate agents to ensure home buyers are not being ripped off.

An auction sign outside a house for sale in Auckland.

Photo: RNZ / Cole Eastham-Farrelly

A report by Consumer New Zealand suggests some real estate agents are offering clients a mortgage broker who is from within their own company and earning a commission for it without the buyer's knowledge.

Industry insiders have told Consumer NZ some real estate agents are pressuring mortgage brokers to get information on how much a buyer can afford to pay for a property.

A Ray White Real Estate spokesperson said information about how much money a client had should not be shared and the brokers were obligated to keep it confidential.

Real estate companies are also expanding into the broking business and home buyers may not be told their agent is getting a kickback for referring them to a broker.

Real Estate Agents Authority chief executive Kevin Lampen-Smith said it expected real estate agents to disclose if they got a commission from referring a client to a mortgage broker.

Harcourts real estate company is the majority owner of Mortgage Express and Harcourts' agents refer buyers to Mortgage Express advisers, who sometimes work out of the same office as the agents.

Bayleys real estate also has financial ties with mortgage and insurance broking services Lifetime Group and the Rothbury Group, where their agents also share offices with brokers.

Bayleys said agents were paid a "modest contribution" for referrals.

Real Estate Institute chief executive Bindi Norwell said the reason real estate companies were expanding into the mortgage broking business was to provide a "one-stop shop" for consumers.

Ms Nowell said agents should disclose any relationship that generates financial reward and any financial benefits they receive outside of their usual commission.

But Consumer NZ said rules governing the industry weren't clear cut and have yet to be tested in court.

In Australia, regulators reviewed the mortgage broking market and found no clear evidence borrowers got a better deal.

Consumer NZ wants an investigation and said brokers and agents must disclose their financial ties.

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