New analysis from Genworth Australia highlights the important role mortgage brokers play in exposing customers to a diverse range of lenders and products.
The broker analysis was undertaken to commemorate the 10th edition of Streets Ahead, which monitors the changing attitudes and behaviours of Australians concerning economic and property market conditions, as well as consumer attitudes towards residential property ownership, mortgage debt and property investment.
While the analysis revealed that only 11% of prospective first homebuyers (those intending to buy their first property in the next 12 months) intend to apply for their home loan via a broker, 65% of recent first homebuyers applied for their home loan through a broker.
According to Genworth’s chief commercial officer Bridget Sakr, this says that at some point in the financing process, the broker channel becomes appealing for many prospective buyers.
“As prospective first homebuyers learn more about the different channels available to them to acquire finance, mortgage brokers often become part of the decision process,” she said.
The analysis also revealed that one in three homeowners (33%) who took out their home loan with a lender other than their main financial institution did so due to advice from their broker.
Broker applicants were also significantly more likely to hold their home loan with a lender other than the major banks (54% compared to 30% of lender applicants).
“Brokers have an important role to play in educating borrowers on the diverse range of lenders and products available to them,” Sakr said.
One in two (52%) non-property owners intending to apply for their loan via a broker did not have a particular broker in mind. According to Genworth, this suggests that targeting this group of potential clients may be an effective source of leads for brokers looking to grow their business.
Further, the findings revealed that broker applicants tend to save for a deposit for a shorter period of time and save smaller deposits compared to lender applicants.
Money gifted or borrowed from parents (18%), inheritance (17%) and personal loans
(17%) were the most popular non-savings deposit sources for broker applicants to supplement their smaller deposits.
A larger proportion of broker applicants (39%) used LMI to obtain their loan, compared to 17% of lender applicants.
“Brokers are likely educating borrowers with smaller deposits about LMI and how it can help them to get into a home with a deposit as low as five per cent,” Sakr said.