Consumers Mistaken About the Cost of Mortgage Brokers
According to a survey conducted by mortgage broker Loan Market, Australian consumers share several mistaken beliefs about the role of brokers in the mortgage market. The survey called particular attention to the differences between obtaining financing through a broker and obtaining financing directly from a bank.
Loan Market surveyed 326 of the brokers who are part of its network, asking them to identify the biggest consumer misconception about mortgage brokers. According to the survey, 47% of those respondents stated that the single biggest misconception was the belief that a better deal could be obtained by going directly to a bank.
The second most popular response, offered by 32% of survey participants, was that consumers mistakenly believe that the services of a mortgage broker “come at a cost.”
The reality, according to Loan Market spokesman Paul Smith, is that mortgage brokers are able to find better deals for their customers because brokers can interact with several lenders in order to negotiate the best deal. That capability allows brokers to discover better options than consumers can find on their own.
Quoted in Loan Market’s press release, Smith likened the process to comparison shopping: “The best way to find out if you have a good deal is to go to the market and compare what is out there. It is no different to shopping for any other product. If you don’t shop around the chances of over-paying are very high.”
According to Smith, customers who only investigate their primary financial institutions are likely to miss out on more the advantageous deals that a broker, with several funding alternatives, can uncover.
In addition to the two most popular answers, 21% of the brokers surveyed reported that consumers’ biggest misconception was their belief that mortgage brokers “only offer home loans.”
Despite those misconceptions, Smith noted that borrowers are now relying on mortgage brokers to obtain almost half of all Australian mortgages. Lenders and banks have begun to recognise the importance of the broker network to the mortgage industry, Smith said, because of the sheer number of customers and because “there are no fixed costs associated with brokers, such as a branch facility.”
Loan Market describes itself as “Australia’s largest independently owned retail mortgage brokerage,” with annual loan settlements valued at over $7 billion and a network of more than 600 brokers in Australasia.