Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Brokers Warn Mandatory First-Time Buyer Advice May Limit Consumer Choice

Brokers have raised concerns that making advice mandatory for first-time buyers could remove consumer choice. The proposal, put forward by Paradigm in a recent discussion paper, has been met with mixed reactions across the mortgage industry.

Paradigm’s discussion paper, which was endorsed by several mortgage lenders including April Mortgages and OSB Group, and supported by the Association of Mortgage Intermediaries (AMI), suggests that mandatory advice is necessary for first-time buyers. Paradigm argues that changes in regulatory triggers, expanded execution-only mortgage options, and consumer vulnerability have created a significant point of change for the mortgage market.

Helen Pierson, director of Mortgage Advice Bureau (MAB) New Homes, supports the idea of mandatory advice, stating that many first-time buyers are unaware of their options when it comes to securing a mortgage. According to a recent MAB survey, 73% of first-time buyers did not know about 95% mortgages, and 70% were unaware of track record mortgages. Pierson believes that early advice can help address misconceptions about deposits, financial commitments, age, and adverse credit, which can unnecessarily delay home buying plans.

However, other industry figures have expressed reservations. Richard Dana, chief executive of Tembo Mortgages, believes the current approach to first-time buyer advice is effective and that a mandatory requirement could add unnecessary complexity, time, and cost to the process. Michelle Niziol, chief executive of IMS Property Group, also opposes removing consumer choice, arguing that some first-time buyers are capable of making informed decisions without being compelled to seek advice.

Kate Davies, chief executive of the Intermediary Mortgage Lenders Association (IMLA), acknowledges that advice is beneficial for most first-time buyers but questions whether making it compulsory is the right approach. Davies points out that existing safeguards require advice for complex products and that the Consumer Duty ensures good outcomes for borrowers, regardless of the route they take.

For UK letting agents and inventory clerks, these discussions may influence the future landscape of first-time buyer activity and the broader property market, as changes to advice requirements could impact the speed and confidence with which new buyers enter the market.