After data showed that the mortgage broker market grew to a record 59.1 per cent in the July-September quarter in 2018, The Adviser asked brokers why they think customers are choosing them.
According to father-son duo Paul Pappas and Ryan Pappas of Mortgage Choice (Sydney CBD), confusion around regulatory changes, along with media coverage around the difficulty of obtaining a loan, has driven customers to who they believe are their advocates – brokers.
“Borrowers are basically saying, ‘Well, there’s no point going direct to a bank because I’ll probably get knocked back’. They understand that a broker has more expertise [across] a broader range of lenders. It’s not like a sausage factory that’s overrun [and] where the quality of service is lost,” the Pappas said.
“The experience that we have to offer, I think people buy that. They can see that we are genuinely trying to work with them to help them achieve [their objectives].”
Expressing a similar sentiment, George Tsoukalas, director of BlueCherry Home Loans, said that lenders have changed their policies more often during the royal commission than they had previously, and that customers see the benefit of dealing with brokers who have knowledge of a wide range of products.
“This has resulted in clients being turned down for home loans with their current bank due to their financial position no longer being suitable to that bank’s credit criteria,” he said.
“Customers can now see the benefit of dealing with brokers as they have access to more than one policy [and] one affordability calculation, [as well as the] flexibility of going to lenders outside of the major banks that may be more understanding of their financial situation and circumstances.”
Mr Tsoukalas continued: “We’ve revised and implemented a stricter due diligence process. We have also brought on lenders outside of the major banks that seem to have had less policy changes during the royal commission investigation and are more consistent with their credit decisions. This way, we provide a more seamless experience with our customers.”
George Samios, founder of Brisbane-based brokerage Madd Loans, said one of the key reasons brokers are “beating banks” is that they have a “legitimate interest” in their customers.
“At a bank, you’re a number, you’re a target, and you need to just get the deals in the system. You don’t know who your customers are, you’re not going to see them ever again because you don’t have targets for looking after customers. You never show them how to pay off their loan fast, you never go back to renegotiate,” he added.
“Whereas the broker proposition is the complete opposite of that. We want to look after our clients. In fact, we do such a good job that the [majority of our] business is referrals.”
The founder of Sydney-based brokerage Prez Home Loans, Matthew Preston, noted the greater choice that brokers bring to consumers.
“For us, when we’re speaking to clients, we’re not speaking about a transaction in isolation. I think when you go to a bank, the banks just try to sell and it’s about that transaction. Whereas we’re going, for example, ‘So, you’re buying this property now, but have you considered that if you sold that, then there might be some tax implications you’ve got to speak to your accountant about? And that might stop you from doing this one over here you said was important to you’,” Mr Preston said.
He added that brokers are “piecing together [a] longer-term puzzle” for their customers.
“[We’re] riding that longer journey with people,” Mr Preston said.
“Our drawcard for our clients is that we’ve been there and we’ve done it ourselves. We’ve bought 11 properties, so not only [does the client] get me as a broker, but they also get me as the person who has [experienced] the ups and downs of investing. I readily share those stories as well and pass on my learnings.”
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