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In and among the machinations of the banking royal commission, some bank leaders may have attempted to score a cheap shot and redirect the payment to mortgage brokers from themselves to the public. It drew a fierce rebuff by REB sister publication The Adviser and led to a survey of the public on the issue, focusing in particular on the value and lack of conflict they find in having mortgage brokers in the mix.
The Consumer Access to Mortgages Report, powered by Momentum Intelligence, considered consumer satisfaction and the implications for Australian borrowers in any change to the current remuneration structure of mortgage brokers.
It covers three sections: competition and consumer satisfaction, the current remuneration structure and its impacts and the economic implications of a change.
It unearthed five key learnings:
1. Mortgage brokers create competition in mortgage lending, placing downward pressure on interest rates.
In 1986, the margin on home loans was more than 5 per cent, while in 2019 it is at around 2 per cent. In the same period the broker share has moved from less than 10 per cent to nearly 60 per cent.
2. Consumers are more satisfied with the mortgage broker channel than the proprietary channel.
An astonishing 96 per cent of respondents said they are either satisfied or highly satisfied with their broker, while only 67 per cent of respondents said they are satisfied or highly satisfied when dealing directly with a lender.
3. Commission does not influence a mortgage broker’s decision to recommend a lender.
“My broker was very open about what commission he gets with which bank, I am comfortable that the right loan was selected for me for my situation, and not the one that pays the highest commission,” one respondent said.
4. Most consumers are not concerned with the current remuneration structure of mortgage brokers.
As many as 79 per cent of respondents said they have no concerns with the current broker remuneration structure.
5. Consumers are not prepared to pay a fee-for-service.
As many as 96.5 per cent of respondents who currently use or intend to use a broker would not be willing to pay an equivalent fee.
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