A report has been released looking at how mortgage brokers drive more competitive mortgage pricing and provide valuable services and great choice for consumers.
According to the Deloitte Access Economics report released today, the average mortgage broker has access to 34 different home loan lenders.
Of these they use an average of 10 lenders to settle loans based on their customer’s choice, financial circumstances, needs and preferences.
The report, titled The Value of Mortgage Broking, was commissioned by the Mortgage Broking Industry Group (MBIG) to provide Australians with greater transparency into the role mortgage brokers play in the market, and the value they provide.
It was announced late last year the group would be releasing a survey as part of the report.
It revealed that the market share of broker-originated loans for lenders who are not major banks or their affiliates has increased from 21.4% to 27.9% in the last four years.
Mortgage & Finance Association of Australia (MFAA) CEO, Mike Felton, said the report provided important insight into the industry and the value it provides to everyday Australian homebuyers, particularly in helping to drive lower interest rates for all consumers, not only those who use a broker.
He said, “The mortgage broker channel has made home loan financing cheaper for all Australians. While not only providing homebuyers with access to more residential lending options, mortgage brokers have contributed to a fall in net interest margins of more than three percentage points over the past 30 years.”
While the financial sector has been under significant scrutiny from regulators, mortgage brokers continue to be focused and dependent on building strong relationships with customers.
These existing relationships, both directly and indirectly, make up 70% of mortgage broker business, giving brokers a strong incentive to provide a competitive and valuable service.
Finance Brokers Association of Australia (FBAA) executive director, Peter White, said mortgage brokers were committed to providing exceptional customer service that included sound advice, lower search costs, greater competition and a diversity of choice.
White added, “Customer satisfaction is critical for our industry. With so much referral and return business, brokers know they must do everything they can to help their customers secure finance that works for them. And it’s clear that this is happening. More than 90% of homebuyers are happy with their mortgage broker’s performance.
“Beyond this dedication to serving their customers, mortgage brokers are experienced professionals. The report found the average broker has 13.8 years’ industry experience, which speaks to the quality of service and value that brokers provide their customers.”
The report also highlighted the significant value the channel provides for rural and regional Australians.
With customers in rural and regional areas making up three in 10 mortgages originated by mortgage brokers, brokers provide access to a range of lenders in places where there may be few or no bank branches.
The Mortgage Broking Industry Group (MBIG) comprises AFG, Astute Financial, Aussie, Choice Aggregration, Connective, FAST, Finance Brokers Association of Australia, Loan Market, Mortgage & Finance Association of Australia, Mortgage Choice, National Mortgage Brokers, PLAN Australia and Smartline.
The full Deloitte Access Economics report, The Value of Mortgage Broking, can be accessed at http://bit.ly/MFAA-2uGGLSb
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