The 2013 ban on charging commission on complex financial products has led to a 20 per cent decrease in the cost of applying for a mortgage in the Netherlands.

Dutch mortgage brokers and consultants must now charge a flat fee, which has led to increased competition in the industry, says financial services watchdog AFM.

A survey by the organisation showed that the average amount charged by consultants has dropped by around 400 euros. Between late 2012 to mid 2013, the average fee was 2.166 euros; now it is 1.749 euros.

Mortgage advice in the Netherlands

Independent consultants have the largest share of the mortgage market in the Netherlands at 60 per cent. Dutch banks have around one third, while less than two per cent of mortgages are taken out without advice.

Of the people using an advisor, around half talk with several but end up only paying one, while a small proportion use and pay for more than one. As a preliminary discussion is often free of charge, the AFM explains, it is easier to shop around.

AFM's research showed that people are now spending more time doing their own research. Currently, people spend an average of 5,8 hours talking with advisors, and a further 6,6 hours searching for information themselves.

Last year, people were taking an hour more with advisors and an hour and a half less looking at options themselves.

Also, AFM says that further clarity about the cost of advice has meant that people are now more likely to negotiate its price. In 2011 and early 2012, 20 per cent of people bargained down the consultant’s fees; now that figure is 30 per cent.

Choosing the right mortgage

Michiel Denkers of AFM said that it is good that consumers have a choice when it comes to taking out a mortgage. He added, however, that taking out a mortgage without advice is only recommended for consumers with a very good understanding of the issues.

"A wrong choice can, after all, cost money in the long term. Sound financial advice may come at a cost, but it can end up earning you money; for example, with lower interest rates or fewer disappointments.

"As a consumer, you must are not be blinded by the price, because the quality of the advice is crucial. But these lower charges due to increased competition are naturally good news for consumers,'' Denkers concluded.

Adding this to the facts that house prices so low that many homes in the Netherlands are being sold at at loss and the number of house sales are back up to pre-crises levels, it seems that many more people may be tempted into the property market in 2014.

Source: AFM