Home buyers feel pressured to purchase insurance from lenders

According to a new study carried out by Gocompare.com, one fifth of homeowners purchase their home insurance from the same company that provided them with their mortgage. This has led to concerns that customers are being pressured by their banks into purchasing insurance from them rather than looking around for a better deal.

The results reveal that whereas 19% of those who purchased their insurance policy from their mortgage lenders did so for quality and value, 12% stated that they felt pressured by the company into making the purchase. A further one third of customers who bought insurance from their mortgage lenders revealed that they did so simply because it was more convenient to take it out with the same company.

Hayley Parsons, chief executive of Gocompare.com, expressed concern at the findings, stating that it was a “worrying sign” of the trends occurring in the present economic climate. Talking in relation to the small margins being made on mortgages, she said that “there can be a danger of pressure selling” on the part of the lenders in order to increase profits, a practice that is not in the best interests of the customer.

Even if the insurance represents a good deal, there should never be any pressure to purchase it from the mortgage lenders. Also, seeing as mortgage lenders only provide insurance from one company, it is not likely to be the most competitive price on the market. The advice to customers is to shop around to find the best deal available, as taking the time to compare prices can lead to large savings without forfeiting on quality.

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