Growth opportunities for brokers identified
The Finance Brokers Association of Australia (FBAA) has released its latest Consumer Access to Mortgages report, offering valuable insights to industry stakeholders regarding the home loan experiences of consumers across Australia.
Peter White (pictured above), managing director of FBAA, said the report, now in its fifth year and conducted annually by independent research firm Agile Market Intelligence, provides detailed information brokers can use “to ensure that the broker channel is not only leading the way for consumer lending, but that our customers value and trust us.”
First mortgage for a home or investment
Of the survey participants, 16% secured or refinanced their mortgage in the last 12 months, while 13% are poised to secure their first mortgage in the next two years.
Borrowers securing mortgages in the last 12 months were more inclined toward property investment or refinancing, indicating a shift in consumer behaviour towards those seeking better interest rates or capitalising on the current property market conditions.
Mortgage brokers trump proprietary channels
For those who secured a mortgage in the last 12 months, 66% applied through a mortgage broker, the FBAA survey found. The remaining one-third, meanwhile, opted for the proprietary distribution channel of lenders, with the majority applying directly online to their lender.
Less than 10% of recent mortgage holders applied directly at a bank branch, underscoring the ongoing trend of bank branch closures, especially in regional Australia, and the growing reliance on digital applications. Borrowers preferred the ease of applying directly online with a lender for an owner-occupier purchase.
The survey found that first-time home buyers and refinancers were more inclined to apply through a mortgage broker, underscoring the value of choice and guidance provided by brokers.
Consumer satisfaction and trust
Customer satisfaction levels were comparable across both broker and proprietary channels for borrowers who secured their mortgage in the last 12 months. Top-2 satisfaction (extremely or very satisfied) for the mortgage broking channel matched the 74% satisfaction reported for the proprietary channel.
While satisfaction with brokers remained high, this year’s survey indicated a narrowing gap between broker and proprietary channels. Nevertheless, the mortgage broking channel sees a higher rate of extremely satisfied clients at 31%, compared to 25% for the proprietary channel.
Mortgage brokers maintained high levels of trust, with 86% of clients expressing trust in their broker, including 44% who completely trust them. This contrasts with lower trust levels reported with representatives from lenders.
“We can be proud of the service we are providing to Australian consumers. There is always room for improvement, but the key element of reputation is trust,” White said. “This report confirms what the industry has known for a long time – that borrowers trust the broker channel far more than the proprietary channel.”
Customer loyalty and attraction
The FBAA survey found that a massive 83% of mortgage broker clients intend to turn to a broker again for assistance with their next mortgage application, highlighting the strong loyalty rates in the broker channel. In comparison, borrowers who worked directly with a lender showed slightly lower loyalty levels.
Borrowers who applied directly online with a lender are slightly more inclined to consider using a mortgage broker (26%) for their next mortgage, in contrast to those who applied directly at a bank branch (21%).
Experienced borrowers, when making decisions about their next home loan, often opt for direct communication with a mortgage broker or their primary personal bank branch. Many mortgage broker clients prefer direct interaction with their broker over online research. In contrast, those who engaged with the proprietary channel are inclined to submit directly to their primary personal bank.
“The overwhelming majority of borrowers who use brokers will continue to borrow through the channel in the future,” White said. “The report found that loyalty and trust were strong enough to lead the majority to speak directly with their broker rather than researching online.”
Future borrowers and growth areas
Among future first-time borrowers, four in 10 (44%) are likely to choose a mortgage broker, with age and income being key indicators. In contrast, one in three (29%) said they will apply directly with their personal primary bank, whether in a branch or online.
The 44% figure, White said, showed an area of significant growth opportunity for brokers.
The report “found that only a minority of first-time borrowers are likely to choose the mortgage broking channel – well below the percentage of overall loans written by brokers,” he said.
“Our industry must better educate first-time borrowers and make them more aware of the broking channel. In fact, I’d suggest that first-time borrowers need the guiding hand of a broker more than anyone, because they are vulnerable to the sales pitches of lenders acting in their own interests rather than those of the borrower.”
Another growth area, the FBAA leader said, is that one in five Australians actively seeks property investment opportunities in the next year despite economic challenges.
“Brokers should be discussing these options with their customers,” White said.
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