Why borrowers trust brokers over lenders

86% of borrowers trust their brokers, survey found

Why borrowers trust brokers over lenders


By Ryan Johnson

As new data shows borrowers trust brokers over lenders, a mortgage broker explains the many reasons why this is the case and the value brokers bring to the mortgage landscape.

Bernard Desmond (pictured above), director of Victorian-based brokerage Blank Financial, said given the value brokers provide, broker market share was likely to reach record levels.

“In my view, we should no longer be called third party channel – we must be the first party channel by now,” Desmond said. “I believe broker market share will continue to prosper and grow as the value that brokers provide in this market is very compelling.”

“The customer is saving time, money, and in most cases, avoiding costly mistakes by working with a mortgage broker. It is a no-brainer.”

What the data says about broker trust

With brokers originating 71.5% of residential loans, mortgage brokers are clearly the current preferred choice for homeowners.

However, this hasn’t always been the case. In 2018, broker market share was 53.9% while 10 years ago it was only 44.9%, according to the MFAA.

Before the introduction of best interests duty (BID), trust in brokers was even declining.

 But in recent years, that has changed dramatically, according to new research by Agile Market Intelligence and the Finance Brokers Association of Australia (FBAA).

The 2023 Consumer Access to Mortgages report reveals a strong vote of confidence in mortgage brokers. An overwhelming majority of their clients, 86%, expressed trust in their brokers, with nearly half, 44%, reporting "complete trust."

 This confidence significantly exceeded that of borrowers who dealt directly with lenders, where only 73% expressed trust and just 27% reported "complete trust."

This trust translated into loyalty, with 83% of mortgage broker clients planning to seek their assistance again for future mortgage needs.

The ongoing value of mortgage brokers

Part of the reason for these statistics, according to Desmond, was that the expertise of a mortgage broker extended far beyond initial application assistance.

Desmond said they acted as trusted guides throughout the entire journey, from understanding one’s  needs and gathering documentation to navigating complex lender policies and recommending the best options.

“Brokers service their clients throughout the life of their loan and not just at point of sale. This is done by negotiating with the banks regularly by doing pricing health checks and keeping the bank accountable to provide a competitive offer to clients introduced to the bank by the broking business,” Desmond said.

“There are so many moving parts when a customer is applying for a home loan with a bank.”

A real-life example of a broker’s value 

A recent example perfectly illustrated the invaluable role of mortgage brokers in today's market.

Just this month, a first-time homebuyer secured a vacant block of land in Victoria for $520,000. Pre-approved with their existing bank, they were confident in their purchase.

However, a surprise awaited them: the bank's valuation came in at $40,000 below the purchase price.

“In other words, the client would need to find an extra 40k to avoid lenders mortgage insurance (LMI),” Desmond said.

Undeterred, Desmond refused to accept defeat. They pursued alternative options, presenting the case to two additional banks.

The second bank valued the property at $500,000, still short by $20,000. However, the third bank's valuation company assessed the property at the purchase price, allowing the clients to proceed without LMI.

“We did not give up and eventually achieved the client’s desired outcome,” Desmond said. “Without a broker, the customer would be stuck spending money on LMI, but our advocacy had a significant impact on the outcome of the transaction.”

Why brokers need to CARE

While the advantage above was one of many examples of brokers providing value, FBAA managing director Peter White (pictured below) urged brokers not to rest on their laurels.

White said that 17% of borrowers who applied through a mortgage broker for their last mortgage intended to apply directly to a lender next time.

“We can never take our market and clients for granted, and we should not accept the loss of one in every six clients,” White said. “I believe we can do better, and I encourage every broker to keep improving across every area.”

Desmond said that as long as brokers continue to CARE – a concept he created to ensure standards within Blank Financial – the mortgage broking industry will continue to take market share.

C – Choice:

“We believe in offering diverse loan options from a wide range of lenders. We'll compare rates, terms, and features to find the perfect solution that aligns with our clients’ unique needs and financial goals,” Desmond said.

A – Advice:

“We're not just here to process paperwork. We're our clients’ trusted advisor, providing expert guidance every step of the way,” Desmond said. “We'll answer questions, explain complex financial jargon, and help navigate the intricacies of the mortgage process.”

R – Research:

“We don't settle for the first option we come across. We diligently research the market, constantly staying updated on the latest trends and best rates. This ensures our clients receive the most competitive offer possible,” Desmond said.

E – Educate:

“We believe in empowering our clients with knowledge. We'll provide clear and concise explanations of various loan options and answer any questions they may have. This allows them to make informed decisions with confidence.”

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