Who Can We Trust?
Although it’s important to always check the veracity and integrity of information sources, a recent survey completed by ‘Mortgage Choice’ (Broker Aggregation Group) found that a large percentage of Australian home owners place trust in their broker ahead of their bank. The survey was probably still close to a ‘straw poll’ in the sense that it sampled (1023) home owners.
Results were as follows:-
Two in five were considering refinancing their home loans
Out of the two in five, 94% said they trusted mortgage brokers when it came to loan recommendations.
53% felt they were worried they may not get the best deal when speaking directly to their bank.
49% felt that banks didn’t have their best interests in mind.
There are some obvious points to make here :-
An existing bank can provide a range of home loan deals but it only relates to their product range. They cannot have a deep understanding of competitors products.
Every home loan borrower’s circumstances are unique and they require specific attention. In many cases these unique circumstances simply don’t match with a bank’s product range and credit policies.
Banks are selling products . Brokers are selling a service .
I’ll touch further on the last point above because new legislation ‘Best Interest Duty’, that came into being from the 1st January 2021, ensures the mortgage broker takes a principal based approach and comprehensively documents all conversations and actions when dealing with their clients. It carries clear focus on making sure that loan product recommendation meets the clients needs and objectives.
Statistically 60% of home loans in Australia or near enough to that, are now written by mortgage brokers. In 2003 I recall that was sub 35%. That’s testament the consumer sees the value proposition in the broker channel.