Brokers are being warned not to be fooled by the big banks' "bait-and-switch" tactics. We speak to Lisa Montgomery of resi (pictured) and Justin Doobov of Intelligent Finance.
Video transcript below:
Donna Sawyer, Australian Broker News TV
Donna Sawyer: The big banks are in the firing line again, accused of using bait and switch tactics to draw customers in. And while competition between the lenders is fierce, borrowers are consulting their mortgage brokers for low cost loans. But Lisa Montgomery of Resi warns the cheapest deal isn’t always the best.
Lisa Montgomery, Resi
Lisa Montgomery: There is no point in moving from one of the big four to another one of the big four. I think that if brokers are smart, what they will do and they are smart, they will move that loan to a second tier or they will move it to a non-bank opportunity where there is going to be a more holistic service proposition for the borrower.
Justin Doobov, Intelligent Finance
Justin Doobov: The easiest lever to pull is the pricing lever. They pull the lever, get more business in the front door, the problem is that a lot of them haven’t created a good back end to be able to process it. So they will get the deals in the front end and they can’t process it, they get unhappy clients, unhappy brokers, slow turnaround times, their service suffers.
Donna Sawyer: In fact Justin Doobov of Intelligent Finance says brokers risk losing valuable business by chasing cheap loans for clients.
Justin Doobov: Brokers that focus mainly on chasing the cheapest interest rate will lose value in their business because effectively they are building a whole client base that are price shoppers, you need to make sure you got a client base and more of clients who want your service at a competitive price.
Donna Sawyer: And with banks tipped to raise interest rates independently of the RBA this year, Lisa Montgomery says there is already a lot of activity in the refinancing market.
Lisa Montgomery: It’s concerning that the banks will be increasing rates outside of cycle and now continue to do that this year. Everyone that I am talking to is indicating that it’s probably going to happen within the next couple of months, that we will see another increase outside of the RBA. But it really does depend on what the RBA does as well. That’s going to create some opportunity for refinancing. That opportunity is really available right now, there is a lot of refinance activity going on, because people are seeking a lower rate.
Justin Doobov: You should be looking for a lender that has not just looked after you today by offering you a cheaper rate, one that historically has looked after clients, one that historically has had competitive pricing, one that historically has had good service and one that you know that has got the systems in place. He is going to support you as a broker and not just be there for a pulling the price lever to get business indoor today, to meet certain internal volumes and next week they won’t be able to service your client.
Donna Sawyer: This is Donna Sawyer reporting for Australian Broker News TV.