You might expect a mortgage broking business to say good things about brokers. But as recent data proves, Australians also have a high opinion of mortgage brokers.
Mortgage brokers originated 66.5% of all new home loans in the December quarter, according to the most recent data from research group Comparator. That is a record December result.
To put it another way, lenders originated only 33.5% of new home loans in the final quarter of last year.
So two-thirds of Australians who wanted a home loan went to a broker, while only one-third went to a lender.
The Australian public’s strong vote of confidence in mortgage brokers in the December quarter was not a freak result. On the contrary, it reflects a long-term trend: with each passing year, more and more consumers are choosing brokers over banks. In just two years, brokers have increased their market share by 11.2 percentage points.
If this trend continues, it won’t be long before three out of every four Australians are using mortgage brokers for their next home loan.
Why have Australians fallen in love with brokers? Because of these six reasons:
When you visit a bank for home loan advice, you get told about only one lender’s products – the bank’s – even if the staffer knows of another lender offering a better deal. But when you visit a broker, you get much more choice. For example, Shore Financial compares home loans from more than 45 lenders, including the big four banks, regional banks, credit unions, non-bank lenders and our own Shore Private offering. So instead of being forced to accept whatever your local bank offers, a broker can shop around on your behalf to find you a loan with the interest rate, fees, features, borrowing criteria and turnaround time you’re looking for.
After your mortgage broker has compared loans for you, they’ll use their expertise to recommend a loan suitable for someone in your situation. You’ll get to make the final decision, but you’ll also be able to rely on their expert advice.
Once you’ve chosen which lender you want to use, your mortgage broker will manage the application on your behalf. You might not realise that different lenders have different assessment criteria – so one vital thing the broker will do for you is package your loan application in a way that suits that lender’s preferences, to maximise your chances of approval. Your broker will also do much of the complex and time-consuming work associated with any loan application. So you’ll have less stress and more spare time.
Mortgage brokers have a legal obligation to act in their clients’ best interests. This is known as the Best Interests Duty, and it’s enforced by ASIC, Australia’s financial services regulator. However, lenders don’t have to follow the Best Interests Duty. So brokers have to operate to a higher ethical standard than banks.
Mortgage brokers are also incentivised to provide better customer service than lenders. That’s because most brokers either own their own business or unofficially run a ‘business within a business’. So brokers know that if they don’t provide good service, they’re unlikely to get the referrals and repeat customers they need to be successful. By way of contrast, bank staff come and go all the time, so they don’t build the same relationships with their clients and don’t have the same motivation to take care of them.
As you can see, mortgage brokers provide incredible value – yet most don’t charge for their services. That’s because brokers receive a commission payment from the lender if you decide to take out a loan and they get your loan approved. Most lenders pay very similar commission rates, so there’s no real incentive for a broker to unduly favour one lender over another.
Just as brokers offer more value than banks, Shore Financial tries to offer more value than a typical broker. We’ve won numerous awards over the years and have more than 175 five-star Google Reviews.
To discuss your options, you can call us on 1300 416 700, email us on info@shorefinancial.come.au or fill in this online form.