Brokers who specialise in refinance home loans are helping their clients achieve better home loan outcomes. In fact, the Finance Brokers Association of Australia (FBAA) state brokers are now well-positioned as banks fight to keep customers. Furthermore, the range of competitive products is evolving giving borrower’s more options.
The FBAA’s recent survey results on consumer satisfaction highlight that many borrowers are thinking of ‘switching lenders’. This change of heart is due to borrowers ‘not feeling the love’ with their current lender. Of 1,150 survey respondents, some 12% said they wished to switch lenders. This figure is 7% higher than last year’s data.
Based on these results, the FBAA feel that today’s lending environment gives brokers an opportunity to offer borrowers better value. However, this is if brokers are at the forefront of their business and willing to talk directly to their client. Plus, brokers must believe in the benefits of refinancing so they can make borrowers aware of these.
At present, mortgage brokers hold just over a 50% share of the lending market. They are also said to be responsible for around 60% of market growth. This share is expected to climb as more borrowers become dissatisfied by banks.
Many borrowers with bank home loans say that they are sick of their lender not passing on rate cuts. The last official Reserve Bank cut of .25%age points was only partially passed on to borrowers. At the top of the scale, the Westpac Bank reduced rates by 0.14%. This move saw this bank’s standard variable owner-occupier rate drop to 5.22%. At the bottom of the scale, the National Australia Bank dropped owner-occupier rates by just 0.10% to 5.25%.
Nevertheless, non-bank lenders have passed on these cuts. Plus, many are offering far more competitive deals. More than 150 non-bank lenders now have variable owner-occupier rates that are lower than 5.20%. In general, non-bank lender rates are as low as 3.91% for standard variable rate home loans.
Other concerns borrowers have with banks is that they are making interest rate moves independently of the Reserve Bank. The latest being the splitting of loan types – investor and owner-occupier – and rate hikes for investment loans. These types of moves scare borrowers.
Many banks are using the latest online tools and marketing tactics to draw new borrowers to them. Brokers can use the same tactics, but also need to highlight that they understand a client’s ever changing needs. Also, brokers must define their refinance home loan knowledge. Along with how they find competitive lending packages and assist borrowers to shop around.
Brokers need to define that a borrower can save by switching lenders. Also, a broker should explain how effortless the process is with their help. These aspects are the two largest deterrents to taking out a refinance home loan. Borrowers have a set and forget mindset. They are busy and don’t want the hassle of having to re-applying for a home loan. The application process for them is long-winded and time-consuming.
However, illustrating savings over the lifetime of a loan may be the key to success. For example, a rate cut of just .10% can shave thousands of a home loan over its term. So if a broker finds a lower rate than the current rate a borrower has, they need to illustrate savings.
Another tactic that brokers can employ is to show borrowers how easy the refinance home loan process can be. They should walk a potential client through the process. This approach often makes a borrower feel more at ease. Thus, the borrower is more willing to look at their options and to discuss their concerns. They may also want to ask more questions.