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Investors choose banks over brokers

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A majority of consumers feel more confident going direct to a bank than to brokers, new research has revealed.

According to a recent poll by Loan Market Group, brokers were asked: ‘what’s the biggest misconception about mortgage brokers?’ and 47 per cent said customers had thought they “would get a better deal going direct to a bank”.

Loan Market corporate spokesman Paul Smith said 32 per cent of the 326 Loan Market brokers surveyed believed the major misconception was consumers falsely believed their services came at a cost.

He said another 21 per cent of broker respondents said consumers thought they only offered home loan products.

“Customers who just go to their main financial institution are likely to be missing out on a better home loan,” he said.

“The best way to find out if you have a good deal is to go to the market and compare what is out there. It is no different to shopping for any other product. If you don’t shop around the chances of over-paying are very high.”

Mr Smith said a common misconception is that a lender will charge an additional fee or charge for going through a broker.

“The reality is that a mortgage broker can negotiate your needs between several lenders and uncover discounts not available to those shopping on their own,” he said.

Mr Smith said informed customers go to the market to find a better home through a mortgage broker, with almost half of all mortgages in Australia now obtained this way.

“The banks and lenders are moving to recognise mortgage brokers as a preferred distribution network for mortgages because of the number of customers using them and the fact there are no fixed costs associated with brokers such as a branch facility,” he said.

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