The vast majority of Australians believe the home loan application process to be a negative one, but two-thirds believe that using a mortgage broker makes getting a home loan easier, new research from Aussie has found.
The findings come in Aussie’s new Cutting through the Home Loan Crap report, which saw more than 2,000 Australians surveyed by Lonergan Research between 28 June and 7 July 2019.
Notably, the vast majority (84 per cent) of borrowers said they believed there were benefits to using a “home loan expert (e.g. mortgage brokers)” throughout the home loan process, largely due to their knowledge of bank processes and legislation, understanding of “how to get the process done faster” or because “they know the way to get [the borrower] the best deal”.
Moreover, 68 per cent of Australians agreed that using a mortgage broker makes getting a home loan easier, with younger adults (Gen Z, Millennials and Gen Y) more likely to agree that brokers make the mortgage process easier than their older counterparts.
When asked what they believed were important elements of a good home loan experience, 9 out of 10 respondents said “having consistent help” through the process was important (88 per cent), as was “having someone who can simplify the complexity” (87 per cent) and “knowing someone is across all the current regulations, procedures and processes” (87 per cent).
A similar percentage also stated that it was important to “be able to talk to someone early”, have “access to home loan experts”, or “work with someone who has direct local knowledge” in order to have a good home loan experience.
More than three-quarters of Australians said it was also important to have “someone who can just take control and manage it for me”.
When asked where they have received property or home loan advice from in the past, mortgage brokers were the most frequently cited source of information outside of friends and family (18 per cent of respondents) but were the second most trusted source of information for this advice (24 per cent), behind financial planners or accountants (27 per cent).
Millennials were more likely than any other age group (at 30 per cent) to see mortgage brokers as their most trusted source of mortgage or property advice, while those who had been through the home loan process already were more likely to trust brokers than those who had not (30 per cent compared to 24 per cent).
However, only 18 per cent of respondents had actually gotten advice from a broker, the survey found.
As well as finding that borrowers think that having someone to help them in the home loan process is important to a good home loan experience, the survey also revealed that the vast majority of borrowers do not believe the mortgage application process to be a positive one.
According to the report, 70 per cent of respondents described the home loan application process negatively, with more than two-thirds (68 per cent) of Australians stated that they had experienced a challenge whilst trying to get a home loan, with more than half (53 per cent) citing challenges relating to the application process itself.
Speaking of the findings, Aussie chairman John Symond commented: “Today’s property market has all the right conditions. It is steady, we have got low interest rates, and national average auction clearance rates are above 75 per cent; however, Aussies could be missing out on this opportunity because they are overwhelmed or confused by the home loan process.
“Put simply, this is a mortgage broker’s role, so it is unbelievable to me that Australians are delaying buying or refinancing due to the process, which they don’t have to do alone. And to be honest, I do not blame them. There is too much jargon and paperwork, that it is no wonder Aussies are confused.”
Mr Symond said it was “crazy” that majority of respondents were negative about the home loan process, adding it was “a sad fact of the current state of the home loan market that such nit-picking criteria is now being applied to approvals, like scrutinising takeaway meals, movie tickets and other minor expenses”, he added.
Mr Symond continued: “The last two years have brought sweeping changes to regulations around lending, making it more important to talk to an expert.
“A broker can help guide you through the application process and are across the constant change in regulations and lender policies.
“Our research also identified that the top source of home loan advice Aussies receive comes from friends and family – who in many cases are not experts, fuelling mortgage myths,” he added.
Given the findings, Aussie is now launching a new advertising campaign aimed at demonstrating that mortgage brokers can help simplify the “mortgage mumbo jumbo”, dispel any myths, and do the heavy lifting for Australians in securing a loan.
Mr Symond concluded: “Aussie’s been doing this for almost three decades, and we’ve seen it all – the highs, the lows and everything in between.
“The home loan market may have changed, lenders may be asking more of customers, and Australians may be more confused than ever, but our mission today is no different to what it was when we first opened our doors. My advice: ditch your hairdresser and tailor’s useless tips and go straight to Aussie.”
The Cutting through the Home Loan Crap report findings come just days after the Australian Securities and Investments Commission (ASIC) released its Looking for a mortgage: Consumer experiences and expectations in getting a home loan, as part of a study based off its observations of 300 consumers who were in the process of taking out a home loan, as well as a survey of an additional 2,000 consumers.
According to ASIC, the key findings echoed the sentiment that borrowers expect brokers to find them the “best” home loan, with consumers expecting that the broker would “do the work for them”.
ASIC also found that first home buyers were more likely to take out their loan with a mortgage broker.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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