Mortgage brokers make up a large portion of the Australian home loan industry. According to the Mortgage & Finance Association of Australia (MFAA), 74.1% of all new home loans in the March 2024 quarter were written by mortgage brokers.
This dominance might lead some to think that lenders are being squeezed out, but the reality is far more nuanced.
In fact, brokers can be a powerful tool for homebuyers, offering a wide range of options, acting in the buyer’s best interest and streamlining the entire loan application process.
Myth busting: Banks versus brokers
Are banks “at war” with brokers?
Over the last few months, several reports and news articles have suggested banks have been actively fighting against brokers.
But, as MFAA CEO Anja Pannek said, this is not the case. “The mortgage broking industry is not in competition with banks. Banks are in competition with each other.”
Ultimately, this healthy competition between lenders benefits the borrower. And, this competition is being driven by brokers. “Mortgage brokers have helped create a more competitive market where it is cheaper for all Australians to access credit,” said Ms Pannek.
That is because brokers act as an intermediary between lenders and borrowers. This pool of lenders includes banks and other non-traditional lenders. This means brokers are not at war with banks, but are instead distributors of banks’ products.
Benefits of a mortgage broker
Why should Australian homebuyers consider using a mortgage broker? There are several reasons:
Best interest duty: Australian mortgage brokers operate under a legal obligation called the “best interest duty”. This means we are required to prioritise your needs above everything. In order to do this, a good mortgage broker will assess your circumstances, understand your goals and recommend the loan product that is most suitable to you, regardless of what lender is offering it.
Access to a wide range of lenders: Brokers are not limited to a single lender’s product suite. We can compare offerings from various lenders, including smaller institutions that may provide more competitive rates or niche loan products. This wider selection allows you the opportunity to find the loan with the interest rate, fees and features that align with your financial situation.
Negotiation help: Securing a home loan can sometimes involve negotiating interest rates, fees or terms. Brokers have experience in dealing with lenders and can use this knowledge and our relationships to negotiate on your behalf. This can potentially secure you a more favourable offer.
Saving you time and effort: The mortgage application process can include a lot of paperwork and legwork. A good mortgage broker will be able to handle most of this for you, gathering your financial information, completing applications and liaising with lenders on your behalf. This frees you up to focus on other important aspects of purchasing property.
The bottom line
Banks and brokers form two intertwined pieces of the mortgage market, with brokers offering several benefits to homebuyers. Access to a large range of lenders and loan products, the obligation to act in your best interest and the ability to streamline the application process make mortgage brokers a valuable asset in your property-buying journey.
By using a qualified and experienced broker, you can increase your chances of securing the most suitable and cost-effective home loan for your needs.
Just Imagine Finance can help you secure a mortgage for your property. To discuss your options, contact us on catherine@justimaginefinance.com.au or 0414 673 359.
