The mortgage broking revolution has failed consumers

Attention: open in a new window. Print

Many brokers now act in the best interest of the banks that pay them rather then the consumers they are working for.

A scathing report by the Productivity Commission singles out mortgage brokers as an area of significant concern, in its draft report on competition in financial services.
The findings suggest the mortgage broker revolution has failed and many brokers now act in the best interest of the banks that pay them rather then the consumers they are working for.
The findings are a concern considering just over 50 per cent of all new home loans now originate through a broker.
According to the draft Productivity Commission report, mortgage brokers receive on average an upfront payment from lenders of around 0.6 per cent of the loan value and a trailing commission of just under 0.2 per cent of the loan outstanding a year over the life of the loan. For an average loan value and duration this equates to a total fee of around $6,000 per loan.
The report found that mortgage brokers do not consistently get lower home loan interest rates for consumers than consumers would have had available if they had have gone direct to the provider themselves.
Considering all of these findings, it’s time for consumers to stop and think what value brokers actually offer.
South West Credit welcomes these findings. CEO David Brown said it may be a surprise for consumers to find out who actually owns their bank or broker service.
“Consumers do not realise for example, the Commonwealth bank owns BankWest and is a major shareholder in Aussie Home Loans. And that Westpac owns RAMS, St George, BankSA and Bank of Melbourne” said Mr Brown.
He believes consumers are better off dealing with a Customer Owned Bank such as South West Credit, that offers competitive rates and genuinely does have the customers best interest at heart.
“South West Credit operates under the Customer Owned Banking Code of Conduct and is a Responsible Lender that acts in the best interest of the customer at all times” said Mr Brown.

Comments

Name *
Code   
Submit Comment