One in seven borrowers do no research before signing up to a loan

by Mackenzie McCarty30 Jan 2013

About one in seven borrowers fail to do any research at all before signing up to a home loan, according to comparison website

The site’s publisher, Jeremy Cabral, says many people go to their bank with the expectation that they’ll be looked after, not bothering to shop around.

However, MFAA CEO, Phil Naylor, says the results aren’t surprising – and neither should they be much cause for concern.

“It demonstrates an opportunity for brokers, because brokers provide that service. While it’s not surprising in terms of numbers, it shows there’s still great opportunity for the broker channel to grow.”

Naylor says it’s the MFAA’s ongoing aim to promote its registered brokers and says the regulator conducts its own regular research into how consumers choose their home loans.

“According to the research that we carry out every six months or so, over 90% of consumers are generally aware of what brokers do and about 42% use brokers at the moment - and that number is growing.”

He says that, if it’s true 15% of borrowers fail to undertake any sort of research prior to selecting a loan, those who don’t represent a significant growth potential for home loan professionals in the future.

As brokers well know, the difference that 1% can make on a standard variable rate home loan is huge.

Figures show a $500,000 30-year mortgage with a 6.45% interest rate would cost the borrower $631,810 in interest, compared with $516,380 in interest repayments on a loan with a rate of 5.45% - a saving of $115,430.