Estate agents used to give out financial advice and broker mortgage deals on a daily basis, says distinguished industry veteran David Perkins.

Perkins had a sense of déjà vu when he read Eye’s recent story about the Mortgage Market Review:

https://www.propertyindustryeye.com/eat-steak-mortgage-applicants-asked/

Although the very thought of estate agents doubling up as mortgage brokers would be enough to bring the City regulator out in spots, Perkins says it was regular practice for agents to source deals with building societies.

This is what he told us:

“This idea for mortgage lenders to be more cautious and questioning is not that new.

When I first became an estate agent in 1965 (!) mortgage broking was a vital skill.

Our maxim was then, ‘a sale is not a sale without a mortgage’ – so that meant we treated our mortgage-broking activities as part of our sales service to the seller-client, not as a money-maker in its own right.

And we knew our local mortgage market better than many – no, better than any other agencies – and it paid off. When in a not-that-infrequent mortgage famine, if there was any money to be had anywhere, we knew about it!

One source of funds when sufficiently desperate – and I exaggerate not – was a curry & chips bar just off the high street.  Here, deals were done and fragile chains saved – not necessarily at Building Societies Association approved rates admittedly!

The bar is still there, though full of Japanese tourists, but I doubt it is still a reliable if unofficial financial exchange!

Then, of course, we were really only dealing with building societies; if anyone arranged a loan through their bank it would be through a personal connection and favour, as no bank in those days took on fresh, unknown, mortgage applicants. Not in those days.

Jump on nearly 20 years and times changed – then banks and building societies were suddenly allowed to compete, thanks to Mrs Thatcher and her ill-advised financial team.

They thought that giving the clearing banks greater freedom would encourage them to invest big time in badly needed industrial renewal. But why should they take such risks? Far quicker, easier and simpler just to invest in UK residential mortgages which were as safe as houses. So that is what the banks started to do, thus frightening the Building Societies Association rigid!

I said ‘quicker’. The banks’ record as far as my own buyers went was about 20 minutes.

A gentleman came in to see us and agreed to buy a decent local property. We talked about a mortgage but he thought he’d try his own bank first. This was nearby so off he went to see the manager. He was back in very little time.

Yes, he had his mortgage agreed. We explained that took time and his offer was only in principle. Oh no, he said, he had had an offer. The bank knew his salary and regular outgoings already from his accounts.

He told the manager which house it was and what he had agreed to pay. He said he knew those houses well as he lived nearby and the loan to value was perfectly in order. Yes, he had indeed got his mortgage and it sailed through in double-quick time!

Back to the 1960s. Then, all the building societies were more inquisitive and we got to know their foibles and idiosyncrasies – basically, who would do what and how to play it.

Whenever we had arranged a loan in principle, we would warn –or should that be ‘coach’? – the hopeful young couple in what to say and how to answer the critical questions.

Obviously status and prospects mattered, but the big killer was any outstanding hire purchase repayments.

And as cheaper first-time-buyer homes were some way out of town, a car was vital and many would buy the car first and the house second! That was fatal as the HP repayments were immediately taken off the amount of mortgage repayment they could afford and this meant they could no longer afford the house.

Time and again we would warn youngsters to sort out the property and the mortgage first and keep the old banger until after completion.

When talking to any building society, it was critically important to ensure that every question was answered scrupulously honestly.

Back then, our local building society managers met regularly, and in a more prestigious club than the nearby curry & chips bar.

Here they would compare notes and they all soon knew what the others are doing. Hence if any case had a potential problem it must be mentioned and fully explained up-front as truth would out.

This obsession with honesty also helped our own professional reputation enormously, as the building society managers got to know that when we asked for help with a particular case, it would be clean and straightforward.

And if one of them had an application cancelled, releasing money, they would ring us first as they knew we’d have a suitable case ready to place and that it would be clean and quick and ensure their quotas were fully used up that month.

One particular building society manager was a good friend who would always help out when he could, but he went what I felt was a little too far in his personal questioning! “Do you plan to have a family?” is fair enough, just, although “Yes, the minute we move in,” is not the right answer!

However, this guy would want to know what birth control precautions they were planning to use, and unless they had virtually a doctor’s letter confirming their arrangements, he would launch into a full family planning lecture – the whole works.

So, as with other critical questions, we warned them what would happen and not to be too embarrassed as he was a kindly old man, and quite harmless, so they should just nod and listen and, with luck, they’d get the loan they needed!

Talking about honesty, one rival estate agent – without our contacts or reputation – decided to help their applicants by providing more favourable references than their actual employers could offer.

They did this by setting up companies in other parts of the country which would confirm that the mortgage applicant was a regional representative on an impressive salary and commission scheme – whatever was necessary to justify the required mortgage.

At first this worked well and we were amazed when a couple we knew well were able to buy a property which was way outside their price range – or would have been, had they been truthful in their mortgage application.

I mentioned that building society managers met at a club for lunch and a chat. The coincidence of these remote employers apparently paying top rates was soon noticed and when they compared various letters they all had the same wording and came from the same person.

Checking further, it then transpired that the companies had been registered by the chaps running the local agency and they did not actually trade or employ any local staff.

The message soon went round the town and suddenly this fraud came seriously unstuck and the agents were no longer able to place any mortgages locally, not even genuine cases.”