Lack of consumer awareness hurting brokers

by Miklos Bolza26 Apr 2017
Brokers are missing out on attracting an entire segment of borrowers due to a lack of consumer knowledge about how the industry operates.

The Consumers on Brokers survey by Australian Broker’s sister publication Mortgage Professional Australia polled more than 600 borrowers and found that 12% had never used a broker before.

Of these, 23% said they did not know what a broker did while 18% said they did not want to pay a broker. A whopping 42% of respondents who had never used a broker said they thought they could get a better deal going directly to the banks. Surprisingly, 17% said a broker earning commission made them feel uncomfortable.

The survey also found that digital mortgage applications would be a real threat in the future with 38% of those surveyed saying they would be prepared to do their mortgage application entirely online without any face-to-face contact. A further 34% said they may be willing to do so.

However, there were some obstacles to an online-only mortgage process. The main hurdle was 31% saying their needs were too complicated to fit within an online form. On top of this, 23% felt more comfortable with face-to-face meetings while 14% weren’t comfortable filling out a digital form without assistance.

Those polled were also asked about their last broker experience and whether they would change anything. Responses were mostly positive with 82% saying they would definitely use a broker again.

“The experience I had with my broker was excellent. She was responsive and actively sought out the best deal with a great level of communication along the way. Once the loan was settled, she then followed up with a check-in call and a gift to thank me for the business. Outstanding overall, a very positive experience,” one consumer said.

“He was excellent. He found me the deal I needed in 24 hours and had approval in another 24 hours. The rate was excellent and the service superb. I was going overseas and needed everything done in a very short amount of time. There were no upsets or mishaps and everything went according to plan,” another wrote.

However, some borrowers recounted their negative experiences with brokers.

“I would not waste my time trying to use bad brokers. I gave the most recent one the numbers to work with and asked for their assistance to extract equity and optimise my loans. Unfortunately this proved to be too difficult for the broker who after 22 days came back with higher loan pricing than what I currently pay. I have read about people using good brokers, but to date, I haven't been able to find one,” one respondent wrote.

Common complaints about brokers included the broker’s lack of product knowledge, brokers pushing particular products onto clients, overly complicated system interfaces, and a lack of clarity around approval times.

Some consumers also said that now they had gone through the loan process once with a broker, they could handle this on their own in the future.

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