High profile lender 'break ups' to benefit consumers

Written on the 16 February 2011 by Kristy Sheppard

Time to research a home loan switch with substance

Australia’s largest independently-owned mortgage broker, Mortgage Choice has been calling out for some time for a more competitive home loan market. It is happy to see a proactive handful of lenders engaging in a potentially market share-nabbing advertising and public relations war.

Things are looking healthier for borrowers these days thanks to a couple of the major banks and a number of other lenders introducing a range of incentives to encourage people to switch.

However, buyers must be cautious of moving until they understand the true benefit vs. cost equation.

Mortgage Choice spokesperson Kristy Sheppard said, “We are excited to see a further awakening of lenders’ competitive spirits within the home loan space. I expect the recent campaigning to torment others into action.”

“It will benefit many consumers by heightening their awareness of the wide variety of home loans and lenders available. Let’s just hope they look beyond fancy marketing campaigns and understand the true value of any incentives. Our advice is to focus on comparing the real substance of home loan products available today. The benefits of switching must outweigh the overall cost of doing so.

“The new offers, including lenders offering to pay switch fees and providing interest rate discounts, should spur more fed-up borrowers to shop around. Mortgage Choice is already observing a significant spike in borrowers researching their options. Our website's unique page views for refinancing-related content have jumped 25% on the same period in 2010 and 14% on last month.

“It is also interesting to note that our 2010 Refinancers Survey found those who switched loan product as well as lender saved more per month than those who simply switched products. Further, those who used a mortgage broker were more likely to switch both and to save money from doing so.”

A borrower with a 30-year $300K principal and interest loan at 7.3% can reduce the interest owed by almost $22K over the loan term if they switched to a 7% rate loan. Going from 7.6% to 7% reduces it by over $44K. Of course, this does not take into account possible exit fees, set up fees, ongoing fees and lenders mortgage insurance but it does provide an idea of the difference switching can make.

“I really hope we continue seeing a rise in well-priced, innovative home loans. However, it will make the mortgage market more complex for borrowers. Working with an experienced mortgage broker with a large lender panel should help save time, money and confusion,” said Ms Sheppard.

Refinancing resources:
Refinancing infographic: www.MortgageChoice.com.au/tips-and-checklists/refinance-home-loan-infographics.aspx
Home loan product comparison calculator: www.MortgageChoice.com.au/calculators/home-loan-comparison-calculator.aspx
Other home loan tips, checklists and news: www.MortgageChoice.com.au

For further information or to arrange an interview, please contact:

Kristy Sheppard / Belinda Williamson
(02) 8907 0502 / (02) 8907 0472
Belinda.williamson@mortgagechoice.com.au

About Mortgage Choice, Australia’s largest independently-owned mortgage broker
 
Mortgage Choice has a national network of hundreds of franchises with loan consultants supported by Group and State Offices. They provide guidance on, and choice of, home loans offered by an extensive panel of leading lenders. Many consultants provide a broader service offering, also helping customers source commercial and personal loans, asset finance, deposit bonds, and risk and general insurances.
 
Importantly, Group Office pays franchisees the same commission rate for home loans they write, regardless of the rate paid by the lender selected by a new customer. It has done so for most of its 18-year history, working in each customer’s interests to source a solution that suits their individual needs.
 
Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).
 
Recent recognition: 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; No.1 on The Adviser magazine’s 2010 and 2009 Top 25 Brokerages lists; 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list; 2009 and 2008 BRW Fast Franchises list; 2009 Australian Banking & Finance Awards Best Financial Institution Employer; 2009 Great Place to Work® Institute Best Companies to Work For list.
 
Click here to read more about Mortgage Choice.