More than six out of 10 broker clients would be willing to pay a fee for the service, according to new research released by the Mortgage & Finance Association of Australia (MFAA) and Deloitte.
The study, Customer Experiences of Using Mortgage Brokers, surveyed 1,000 borrowers who had taken out a residential mortgage over the past two years. One of the questions asked was the hypothetical: “If you used a broker and they were not paid commission, would you be prepared to pay a fee for their services?”
The poll found that 63% of clients would be happy to remunerate the broker instead of the lender. This could be further broken down as follows:
The remainder (37%) said that they would not use a broker if they were required to pay a fee.
At a media briefing yesterday (3 November) held for the release of this study, Stephen Hale, head of marketing & communications at the MFAA, said this type of payment model would not be healthy for consumers or brokers.
“I think it would have an impact and I think it would reduce the number of brokers,” he told the media. “That would reduce consumer access to lending, particularly in regional areas.”
When asked whether brokers could survive on what the Deloitte report said people were willing to pay, Hale didn’t mince words.
“I would say that a lot of brokers would not be able to operate within those figures and run a business and employ people. That’s just being frank.”
Looking at the last four years of broker market share, trends showed consumers had high levels of trust and confidence in brokers despite criticism of certain elements such as commission, he added.
In fact, the Deloitte report backed this up with 51% of broker customers completely satisfied with the experience. This was way up compared with the 38% of lender customers who felt the same way. When asked to give a rating out of 10, 32% of broker clients gave their broker nine or 10 compared to only 20% of those who went direct to the lender.
The study found that broker customers were mostly after a relationship and support throughout the loan application process. They also perceived brokers as offering value-added services and an independent stance from the banks.
On the other hand, those going direct to the lender tended to seek the best price and product features. They had also made up their minds about the product they wanted and valued getting the specific mortgage they had researched beforehand. Some did not expect any additional services beyond the transaction of the loan.
