Online lenders are the best place to go for home loan rates, according to comparison site Mozo.com.au.
The company’s research shows the average customer of one of the big four banks can save more than $2,500 a year by switching to an online deal. This has increased from a year ago, when the potential annual savings were $2,250.
Property expert at Mozo Steve Jovcevski said online lenders can pass on savings from their lower operating costs. The research had also shown online lenders were cutting their interest rates, a move which allows them to offer even better deals.
Despite these savings and the fact most other services have migrated online, only 27% of consumers said they would take out a home loan with an online lender.
When asked about other financial products like car insurance, credit cards and personal loans, more than half of consumers were comfortable with applying for these products online. The biggest barrier to Australians getting a home loan online was their lack of familiarity with these types of lenders, with more than half of consumers saying they didn’t know enough about them.
Guiding brokers on how to bring these online savings to customers, Jovcevski said, “Many borrowers are missing out on thousands of dollars in cost savings each year because they perceive a trade-off between great value and security.
"Therefore, brokers need to consider that many of their clients may have some hesitation and provide reassurance that online lenders are just as legitimate and covered by regulatory bodies, just as bricks and mortar lenders are.
“Forty-three percent of Australians say they avoid shopping online for a home loan because they prefer to discuss their needs face to face with a mortgage expert. Even in the digital age, borrowers are still placing a huge value on personal interaction especially when navigating through the sometimes-tricky mortgage maze. This is a huge opportunity for brokers who should ensure they have access to online lenders on their panel to offer clients a viable and competitive alternative to banks.”
Experts at Mozo.com.au compared 525 home loans from 88 lenders, as part of Mozo’s Experts Choice Home Loan Awards.