Home loan refinance: Borrowers trust mortgage brokers over banks

author-avatar By on January 20, 2021
Home loan refinance: Borrowers trust mortgage brokers over banks

Borrowers believe banks don't have their best interests at heart when it comes to refinancing.

With interest rates on home loans falling to record lows, Australians aren't wasting any time in refinancing.

A recent survey from Mortgage Choice found that two in five (38%) of homeowners are either in the process of refinancing or are considering it.

However, the research found over half (53%) of borrowers are skeptical about receiving unbiased advice from their bank when it comes time to refinance, and don't believe they would be advised if they could get a similar or better home loan deal elsewhere.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

One in two (49%) homeowners believe banks don’t always have their best interests at heart, but on the flipside, 94% of borrowers say they trust the home loan recommendations made by a mortgage broker.

Mortgage Choice CEO Susan Mitchell says many borrowers find refinancing overwhelming and want an unbiased opinion they can trust.

“Faced with what can be an overwhelming choice of home loans, homeowners want to be confident they are making the move to a loan that will improve their financial wellbeing through a lower rate, improved loan features, or both," Ms Mitchell said.

“While banks can provide information on their own product suite, they do not have an in-depth understanding of competitors’ products. That is why I urge borrowers in the market for a better deal to engage the help of an experienced mortgage broker to learn what other options they have.”

See also: 9 things to look for in a mortgage broker

For over half (55%) of those surveyed, the biggest benefit of using a mortgage broker when refinancing is the professional support comparing home loan options, rates and features.

Meanwhile, 45% said a mortgage broker streamlines the process, "saving time and hassle".

In February last year, the Australian Securities and Investment Commission (ASIC) issued guidance on new 'best interests duty' obligations for mortgage brokers following a recommendation made by Commissioner Kenneth Hayne in the banking royal commission to ensure brokers do the right thing by customers.

The new rules were aimed at stamping out some mortgage brokers from pushing borrowers into taking out unsuitable loans or encouraging them to go with credit providers who pay the mortgage broker a fatter commission.

At the time, ASIC Commissioner Sean Hughes said the new rules would remove any potential for conflicts of interest and ensure the interests of the borrower were looked after.

"The obligations properly align the interests of mortgage brokers with the interests and expectations of their clients - the borrowers," Mr Hughes said. 

"Consumers should feel confident that their broker is offering the best loan for their circumstances and we expect that consumer outcomes will improve as a result of this reform."


Photo by mentatdgt from Pexels

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Latest Articles

author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy