Mortgage Brokers Inject Competition into the Home Loan Market
Mortgage brokers are now writing almost one in two home loans in Australia and helping consumers to make huge savings, according to leading mortgage brokerage Loan Market.
Loan Market Corporate Spokesman Paul Smith said the brokerage was disappointed by weekend newspaper reports claiming brokers were merely “salesmen” conflicted because of the commissions they received from lenders.
Mr Smith said the rise in popularity for mortgage brokers such as Loan Market, who operate and are owned completely independently of the banks, has occurred because mortgage brokers enable borrowers to make considerable savings.
“The success of a mortgage broker is built upon providing a unique service where they can negotiate lower interest rates and fees and guide borrowers through a range of products most people simply wouldn’t have the time to research,” he said.
Mr Smith said a mortgage broker works in the best interest of clients who are looking for the right deal to fit their personal circumstances and financial goals.
“When borrowers use a mortgage broker, it’s often a relationship that lasts several years or properties,” he said. “A broker understands the customer’s needs on a more personal level.”
Mr Smith said the National Consumer Credit Protection Act has clear requirements on the disclosure of commissions and a customer should feel comfortable about asking about how much a broker is getting paid.
“When using a mortgage broker a client always has the right to know who is being paid what. I would advise any client comparing rates online or using a broker to inquire into the costs paid and the services provided.”
Mr Smith said a recent study of its brokers indicated almost 60 per cent of a mortgage broker’s business is built upon referrals from family and friends of the client.
“When you approach a mortgage broker you should expect full transparency and an even-handed approach to finding the right home loan,” he said.
“Many brokers operate their business in strong support of their local areas and are important to the prosperity and development of local communities and business.”
Mr Smith said mortgage brokers are also strong supporters of many regional lenders and credit societies that benefit from being listed on a mortgage brokers panel among the big banks.
“In supporting smaller and regional lenders, not only are brokers applying pressure on the larger banks to keep rates competitive but they’re helping many borrowers with niche needs, which is what many smaller banks specialise in,” he said.
Mr Smith said unlike some brokerages which were partially owned by lenders, Loan Market is completely independent of the banks and operates without bias or outside influence.
Mortgage Broker Facts
- Mortgage Brokers wrote $62 billion in home loans in the September 2012 quarter, which was 41 per cent of all home loans written in that time period
- A mortgage broker is legally required to disclose all commissions paid.
- No lender or bank charges a borrower any additional charges or interest for using a mortgage broker.
- All mortgage brokers are required to operate under a licence governed by ASIC and complete a minimum education level.