A new report from NAB Broker and Genworth has found that almost half of consumers likely to use a mortgage broker expect to pay a fee.
Released yesterday, the report entitled Engaging consumers and empowering brokers: Essential Knowledge on today’s lending market, surveyed 1,000 consumers across two categories – those who intended to get a home loan in the next two years (either via a broker or direct); and those who had taken out a loan through a broker in the past two years.
One of the key findings in the report was that 47 per cent of those likely to use a broker expected to pay a fee.
“There are brokers who charge fees, no doubt about it, but to think that half of the respondents thought that they would have to pay a fee if they go to a broker once again goes to show that the actual customer value proposition of brokers to the wider market is not clear,” NAB Broker general manager Steve Kane said.
“I think the industry needs to work on how we do that,” Mr Kane continued. “In the industry press it is so well covered, but I don’t think we do a great job of talking to the rest of the market. I think that is what is clearly coming through here.”
Mr Kane said that customers can be quite surprised when they discover that they don’t need to pay a fee for a broker’s service.
“In a perverse way, it devalues the proposition,” he said. “But I think the broker value proposition is credible enough to not have to charge a fee.
“I’m not advocating that brokers should charge fees, but I think it will evolve that way over time anyway.”
The report also found that competition between brokers is growing, with 43 per cent of applicants speaking to more than one broker during the home loan process.
Interestingly, 35 per cent of aspiring home buyers were unlikely to use a broker because they simply hadn’t considered it.
However, the majority of broker applicants (65 per cent) would use a broker again for their next mortgage and 73 per cent would use the same broker.
A key focus of NAB’s relationship with the broker channel, Mr Kane said, is to move beyond the transactional, providing brokers with the tools and support to enable better quality conversations with their customers and build long-term loyalty in their client base.
“We commissioned this report with the aim of providing unique insights to brokers around how their customers perceive them and what drives them to build a long-term business relationship with their broker.
“We hope it will serve as an important resource to brokers when they are looking at where they can add value in the customer experience, how to better engage with clients and prospects, and where to focus their marketing efforts,” he said.
Genworth Chief Commercial Officer Bridget Sakr said the research would provide useful intelligence into how consumers experienced the home buying process through a broker.
“We’re pleased to have partnered with NAB Broker to produce this important research, which will drive valuable insights to brokers to benefit their businesses, and ultimately the consumer,” she said.
While broker market share now sits at 52 per cent, the report found that consumers still need more information on what a broker can offer – only 27 per cent of aspiring home buyers will apply for their mortgage through a broker.
[Related: The road to Brokersville]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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