Mortgage brokers have 'more satisfied' customers
Research conducted by Deloitte on behalf of the Mortgage and Finance Association of Australia has shown that, among the group of successful home loan applicants surveyed, there was little difference in general overall satisfaction between those who went to a mortgage broker and those who dealt directly with the mortgage originator. Around 90 per cent of applicants from both groups declared themselves "generally satisfied".But differences did emerge when survey participants (comprising around 1100 people who had taken on a mortgage in the past two years) were asked if they were "completely satisfied" with the service they had received.Fifty-one per cent of the mortgage broker clients said they were completely satisfied, versus 38 per cent for "direct to lender" borrowers (who had dealt with either a bank or a non-bank mortgage provider). This pattern was observed in many key areas. Asked whether they felt their broker or lender was acting in customers' best interests, borrowers who had gone through a broker clearly felt they were better served than the "direct to lender" category, with 40 per cent agreeing versus 22 per cent.In the survey and in smaller focus groups, the borrowers were asked if they favoured the current remuneration arrangements, with commissions paid by the lender to the broker rather than borrowers having to pay for advice themselves. James Hickey, Deloitte Partner Financial Services, said the feeling was brokers "absolutely" deserved to be remunerated for the service they provided."Certainly in the focus groups the feeling was that responsibility lies with the lender to pay the broker commission, and the customers did not see a problem with that," he said.Hickey said that the fee typically charged was 60 basis points, with around 20 basis points going to the aggregator if the broker was part of an aggregator group.MFAA's head of marketing and communication, Stephen Hale, conceded that at least 15 per cent of borrowers said they had not been told about their broker's fee structure and, based on the survey results, his organisation had some work to do in educating their brokers to be more upfront about exactly how they were paid.Hickey also noted that for some banks (such as those that were entirely online or that wished to extend their mortgage base beyond their regional strongholds) having a broker network was essential and justified the lender paying the brokers rather than the customer."For many lenders who do not have a branch distribution outlet throughout Australia, using a broker channel is an entirely variable cost channel," he said."It replaces the costs they would otherwise have to invest in growing a physical branch-based distribution throughout Australia. So it's more a cost-effective model."