There’s nothing sinister about this; you see the same thing with cars, phones and internet. A lot of competition is always better for the consumer, but only when you have a complete view of the market.
If you use your trading bank for your home loan, you are limiting your scope. And when you go online and do searches for home loans, you have to start comparing. And how do you do that with so many products? Will your knowledge ever be as complete as the professional who works full time in this market? Who works alongside other real Australians, families, individuals with individual circumstances every day?
When you’re a direct customer in a complex market, the process is more supply driven than demand driven. That is, you are forced to deal with what is being offered, rather than putting yourself at the centre of the process.
Using a broker can even this up somewhat: the broker forms a picture of you as a person with a specific situation, and goes to the market. When you have an intermediary working for you, the market bids for your business. You can’t really do this as a retail mortgage customer.
When you use a broker you save time and energy, and you are more likely to find a mortgage not only at the lowest cost but with the best features for you. Most brokers not only have professional networks and industry expertise to draw on, they also have software platforms that give them detailed access to a much greater variety of home loan than the average consumer can access.
Brokers don’t compete with banks. In fact banks and other lenders support brokers, because lenders want borrowers and brokers have the borrowers. In the United States and Britain, finance brokers are becoming the favoured channel for mortgage lending because paying a commission to a broker is more effective than a lender sustaining a branch network.
If you’re looking for a mortgage, try a broker. Check their credentials, ensure they are members of one of the peak bodies and always be honest about your details. And then judge the results for yourself.
Mark Bouris is the executive chairman of Yellow Brick Road, which offers mortgage broking as well as other wealth management services.