HomeSectionsMarket talk Submit Lowest interest rate not biggest reason consumers use brokers

May 18, 2017

MPA Consumers on Brokers surveys suggest ASIC’s criticism that brokers don’t provide better interest rates may be misplaced

‘Help with the application’ is the biggest reason consumers use brokers, MPA’s 2017 Consumers on Brokers report has revealed. 

The survey showed that lowest interest rates were only the third biggest reason for consumers to use a broker (picked by 19% of consumers), after ‘help with the application’ (29%) and ‘access to specialist lenders’ (23%).

The findings come a month after ASIC and consumer groups criticised brokers for not providing better interest rates.  Finding 6 of ASIC’s report found there was no consistent difference in the interest rates provided to broker and direct customer, which according to consumer group CHOICE proved “what consumers expect they’re getting from brokers doesn’t match what’s getting delivered.”

However, MPA’s survey indicates consumer don’t necessarily expect to get the best interest rate. 

In fact getting the lowest interest rate was a major reason for broker customers to go direct to a bank. 32% of broker customers surveyed said they’d go to a bank for their next loan if they could get a lower interest rate, with just 9% citing more support in a branch.  

MPA surveyed a range of first home buyers, investors, refinancers and upgraders nationwide and found only for upgraders was a lower interest rate the main reason to use a broker. FHBs prioritise help with the application, investors need access to specialist lenders and refinancers want a broker to help them with complicated deals. 

As one investor told MPA “the broker I use is an investor themselves and looks not just to this loan but what’s next and how this will affect that one. Not all brokers are investors and don’t understand potential pitfalls [such as] cross collateralization etc.” 

MPA’s Consumer on Brokers survey also looked at consumer attitudes on finding a broker, doing mortgage applications online and how they would prefer to use a broker. Over 600 consumers took part in the survey. 

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