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The financial services regulator has released a series of videos to help consumers get a home loan, which also touches both the direct and the third-party channel.
ASIC’s MoneySmart platform, which provides consumers with information on making “better financial decisions”, has released a series of five short videos that aim to provide the “essential tips on the key decisions involved with buying a home”.
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Hosted by TV personality Shelley Craft, the five videos cover:
- How to get a home loan;
- Working out how much you can afford with a mortgage;
- Saving to buy a home;
- Understanding the hidden costs of buying a home; and
- Being a guarantor for a home loan.
Speaking after the release of the new videos, ASIC deputy chairman Peter Kell said: “For many people, buying a home is likely to be their biggest investment. We encourage home buyers to take the time to understand their individual financial position and be aware of what they are committing to with a home loan. And it is always a good idea to shop around for the best deal.”
Ms Craft also commented, saying: “Buying a home is full of excitement, but it can also be stressful, especially the financial aspects.
“It's important to take your time, consider all your options and be sure to ask lots of questions so you understand what you're signing up for.”
Going through a mortgage broker
The first video, which outlines how to get a home loan, notes that the process can cause “stress” when it comes to “figuring out how much you can afford and how to go about getting a home loan”.
After recommending that consumers “get [their] finances in place so”, the video highlights how mortgages function before outlining that they can be accessed “by contacting a lender directly or by going through a mortgage broker”.
In the video, Ms Craft says: “It's a good idea to shop around for a home loan that suits you and don't rely on just one source because saving even half a per cent on the interest rate can save you thousands of dollars over time.”
While this is the only mention of mortgage brokers in the videos, the page does link to a related page called "Using a broker", which outlines what brokers do and the things to check when using a broker.
Notably, this page suggests that while a mortgage broker “specialises in home loans” and can offer a customer a “variety of loan options”, it states: “But brokers may be limited to a particular range of products that might not suit your needs or give you the best value for your money.”
It continues: “For example, if a credit provider doesn't pay commissions, the broker might not include their loans on the list of products they recommend.”
Further, it suggests that the fact that lenders pay different commission levels “can potentially influence what loans the broker recommends”.
As such, its Smart Tip is for consumers to “shop around to see what deals are out there”.
This finding echoes one from ASIC’s remuneration review, and goes to the heart of ASIC’s proposal for lenders to “change their standard commission arrangements so that brokers are not incentivised purely on the size of the loan” — details of which are still under discussion.
However, the Minister for Revenue and Financial Services, Kelly O'Dwyer, said last week that “despite there being a lot of white noise about conflicts, on the whole, ASIC did find that the actual commission structure wasn’t providing a conflict directly for those people who were purchasing their mortgage through a mortgage broker”.
She added that brokers are providing competition, which is “proving to be quite valuable”.
[Related: Mortgage industry forum preparing policy solutions]
