Broker v straight to the lender: Who goes where?

By Grace Ormsby

August 29 2019
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There are a number of key differences between Australians relying on mortgage brokers and those who go directly to lenders to find a home loan, according to analysis.

ASIC’s new report, titled Looking for a mortgage: Consumer experiences and expectations in getting a home loan, has looked at the home loan journey taken by Australians to look at how consumer satisfaction, costs and outcomes could be improved by lending providers and mortgage brokers.

Consumers using brokers

According to ASIC, while consumers engaged brokers for different reasons, such as expertise or the fact that a broker could “do the work for you”, they generally actually all expect the broker to deliver the same result – to get the “best” home loan, whether it refers to price or rate.

The report said consumers who choose to go through a broker are more likely to be a first home buyer, are more likely to trust the broker to find them the best interest rate, and are less likely to have conducted a lot of research and to know what home loan they might want.

In addition, the research showed that consumers going through a broker tended to be younger by about two years and have incomes around $6,000 lower than their direct-to-lender counterparts.

“Consumers who took their loan out through a broker tended to be more uncertain of the process that lay ahead,” the report read.

“This type of consumer appeared to be looking for someone who could help bridge their knowledge gap and support and advise them throughout the home lending process.”

Consumers going direct to lender

Consumers who choose to find a loan themselves are more likely to have had a loan before, more likely to think they got the best rate because they shopped around, and are also more likely to have conducted a lot of research and know what they want from a loan.

According to the survey used in the report, 60 per cent of all consumers took out a home loan with a lender they had an existing relationship with.

This figure jumped to 69 per cent for consumers who went direct to a lender, while the figure was 49 per cent for broker loans.

ASIC reported that by far the strongest factor influencing consumers to stay with a lender they have an existing relationship is convenience.

Despite the convenience of loyalty, ASIC said its research consistently found consumers that indicated they were disappointed that their lender did not offer rewards for the existing relationship.

No matter which way a consumer chooses to go, ASIC flagged that as consumers progress along the home loan journey, the importance of finding a good rate seemed to decrease for some.

Instead, they became more influenced by other factors such as the convenience of staying with an existing lender (or a lender they had an existing relationship with) and home loan features such as offset accounts.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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