July 21, 2015
Why more and more people are using a Mortgage Broker...
It’s currently more important than ever to use a mortgage broker. Let me explain why. And why you should select a Mortgage Choice broker in particular.
Over the last five years picking the right home loan for your personal needs has become harder and harder for the time-poor borrower.
National Australia Bank (NAB) started the trend off by offering different interest rates depending on how much you are borrowing, and how much equity you have (known as ‘Loan to Value Ratio’ or LVR). Most lenders have now followed this trend. Some are offering pricing to compete in specific niches of this market.
This means that a borrower may go to their normal lender and will be offered that institution’s best rate. Often though, the next day they share this information with a friend or colleague at work and this is usually (if they are lucky) where a friend recommends that they see their mortgage broker.
A common scenario for mortgage brokers is a customer with a small deposit and a relatively small loan. Their normal lender (who prices for LVR and loan size) may have offered them a rate that is between 0.5% and 1% higher than the rate they could get by identifying the right lender for their specific situation.
A mortgage broker can assist with finding the right loan as they deal with a variety of lenders, and not limited to only one lending institution’s loan offerings.
In the last six months, the market has become even more complicated.
APRA (Australian Prudential Regulation Authority), our key regulating body, is forcing lenders to manage the growth of their investment lending portfolio, largely in an attempt to cool the Sydney and Melbourne property markets.
Depending on the position of each lender they are all responding to this in different ways:
- Some have substantially reduced their LVR (Loan to Value Ratios) for investor clients - one from 95% plus mortgage insurance to 80%.
- Others have increased interest rates or reduced rate discounts for this segment of the market.
- Others have increased their servicing ratios so they will lend less to investor clients.
- A fourth group of lenders (who have not had a large investor portfolio to date) are suddenly in a position to attract borrowers with very sharp offers. One lender, for example, is still open for investor business with a sharp rate of 4.09%. We also have lenders with 3-year fixed rates under 4.25%.
In summary, this means there are still great loans out there for investment borrowers - just that they are harder to find. This is why you need a mortgage broker to help you.
The time-poor consumer is finding this maze very difficult to navigate without an expert to guide them - particularly if they need a two lender solution.
The advantage of a Mortgage Choice broker is that we can source from up to 28 different lenders - who in total offer hundreds of loan products that we can choose from - to find the loan that suits you best.
It is no wonder therefore that 50% (and growing) of all loans originating in Australia are now done with the assistance of a mortgage broker. For some lenders, over 75% of their new business is introduced by brokers.
We add value. We save time. We give you choice.
Call Maree Woodcock on 0421 866 700 for a complimentary Home Loan Wealth Check today. Or click on Contact Us above on our website.