Home loan refinance: Borrowers trust mortgage brokers over banks

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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.

Lender

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 10, 2022. View disclaimer.

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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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.

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