What Matters The Most When Choosing a Home Loan?
The financial institution offering the lowest interest rate rather than the strength of the brand is the major consideration for consumers when selecting a lender, a national survey has found.
The survey by leading mortgage broker Loan Market which asked ‘What is the most important factor for you when choosing a lender?’ found just eight per cent of those surveyed said the lender brand was their major consideration.
Loan Market Corporate Spokesman Paul Smith said this sentiment was even more pronounced among Generation Y respondents with just five per cent of that group finding the brand important.
“These survey results are quite surprising given that the big four banks continue to dominate new home loan lending in Australia,” Mr Smith said.
“But some smaller lenders have niche products that are designed to help certain groups struggling to get finance from another institution, such as self-employed borrowers or property investors. They could be gaining more consumer support.
“The laws making it easier for people to switch lenders may have also had an impact on customer loyalty.”
Mr Smith said 59 per cent of survey respondents said the home loan interest rate offered was most crucial to them while the interest rate factor mattered to 65 per cent of Gen Y respondents.
The online poll of 643 respondents found 20 per cent cited loan features as most crucial while 13 per cent of those surveyed said customer service was their priority.
Mr Smith said the gradual fall of interest rates during 2012 had opened up healthy competition between lenders with significant differences in some variable and fixed rate products on offer.
“It’s a good time to shop around and our survey has found that is exactly what most consumers are prepared to do,” he said.
“A mortgage broker is well placed to explain the range of home loan products on offer and the latest statistics from the Mortgage and Finance Association of Australia (MFAA) has found 41 per cent of all Australian home loans are written by brokers.
“They can advise on what loan may suit an individual’s circumstances as well as negotiate for the most competitive interest rate with the respective lenders.”
Loan Market survey results:
What is the most important factor for you when choosing a lender?
ALL / GEN Y
- Interest rate 59% / 65%
- Brand 8% / 5%
- Loan features 20% / 24%
- Service 13% / 6%