CONSUMERS seeking a new home loan or looking to refinance want the mortgage industry to be more transparent so finding a competitive deal is much easier.
Mortgage brokers make up about 55 per cent of all home loan business and they continue to grow in popularity, often helping guide borrowers through the in’s and out’s of various deals before they sign the dotted line.
But new Galaxy research compiled for realestate.com.au found 87 per cent of Australians wish there was more transparency around shopping for a mortgage, which often leaves people bamboozled when trying to pick a suitable loan.
Realestate.com.au’s head of home loans Andrew Russell said it’s not uncommon for borrowers to contact their existing bank for a mortgage instead of shopping around, which may result in them paying more.
“Borrowers will often walk into a bank (initially) but what generally happens after that is they go to a mortgage broker or a provider who offers a range of home loans,’’ he said.
“Here they are able to compare a range of offerings with a range of products that lenders have in the market and that’s why the broking industry has continued to grow over the last decade.”
Brokers can sell loans a range of ways — including through branches, mobile lenders and over the telephone.
There are more than 5000 broker businesses operating nationwide.
Scrutiny has surrounded brokers on their commissions made from loan sales, which often includes upfront and trailing commissions over the life of the loan.
They must also disclose any commissions they receive from the lenders or any other source to the client.
The Galaxy data also revealed Australians still prefer going straight into a bank branch to apply for a loan (48 per cent) ahead of seeing a mortgage broker (30 per cent) or applying online (17 per cent).
But consumer finance expert Lisa Montgomery warns customers that before they even talk to someone about a loan they need to fully equip themselves with information.
“The best research is the research you do yourself, also friends and family will give you advice if they know you are getting a loan,’’ she said.
“But if you have a deep relationship with your primary financial institution and you feel you want to stay with them by all means go along and make an inquiry.
“Gather as much information as possible and then make a decision to go to a broker and they can offer you a number of products, not just one that a bank can offer.”
This month the Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent leaving many fixed and variable mortgage rates around the four per cent mark.