So the Royal Commission has finally released their final report, most certainly not something that the normal person would read or completely understand.
60+% of Australian use brokers to get their home loans sorted to ensure they get the best possible outcome and convenience. This has always been a FREE service, more people would use brokers if they knew how much they actually serve the client on an ongoing basis. The recommendation is that this is to be replaced with a Fee-For-Service model.
Research by Momentum Intelligence found that Mortgagors are more satisfied with the broker channel than the direct-to-lender channel and would be more likely to use a broker in future. According to the report, which was officially launched 31 January, mortgage broker clients are more satisfied with their experience than direct-to-lender borrowers are. Interestingly, more than 63 per cent of direct-to-lender mortgagors said they would switch to using a broker for their next mortgage.
Alex Whitlock, director of Momentum Intelligence said “A serious implication of the proposed fee-for-service model is that consumers would be naturally driven to their primary personal bank, which is likely to be one of the big four. This would reduce competition by driving smaller lenders, who rely heavily on brokers, out of the market.” “Fewer lenders will give the dominant retail banks the opportunity to increase their margin by pushing up interest rates. With mortgage repayments and household debt concerns looming, this result could also potentially lead to higher financial distress for Australian consumers,” he warned.
MFAA CEO Mike Felton said these recommendations did not represent a good outcome for consumers. “As reviews by ASIC, the ABA and the Productivity Commission have found, brokers drive competition by providing a shopfront for smaller lenders, particularly for rural and regional customers. We are critical to the health of Australia’s mortgage lending market.
“I fail to see how decimating the broker channel, leaving Australians with a handful of lenders to choose from, is good for competition, or good for customers,” Mr Felton said.
So there’s still the option of shopping around online. However, just because a lender has the cheapest rate, doesn’t mean they’ll loan you the money. This is clarification that Mortgage Brokers can provide clients with after an initial conversation. At the moment it’s still a FREE service to use a Mortgage Broker, because after July 2020 Mortgage Brokers may be forced to charge the consumer a fee for our service. We’re not sure how these recommendations are in the best interests of customers, as their ability to access choice of lenders just got a lot harder. We highly recommend calling MC Mortgage Solutions today to discuss how we can ensure that your current home loan is the right fit for you.