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Mortgage Brokers – Keeping Competition Alive
Have you ever gone straight to one of the Big 4 for finance and realised later down the track that you could have secured a better deal elsewhere? It’s a common narrative, and something that brokers can help people avoid. Brokers help people get the best deal for their clients; put downward pressure on interest rates; and maintain competition in the finance sector. That’s why in this time of lower consumer confidence and the erosion of trust in finance companies, engaging a broker to take care of your finance needs can not only improve outcomes for your own needs, but also keep the Big 4 honest.
So how exactly do brokers improve their industry? Here are three important points…
Securing the best outcome for consumers
The most recognisable and tangible reason for people to engage a broker is to get a loan that brings about the best possible terms for their circumstances. Brokers work hard to secure the best deal for their clients through research, access to dozens of lenders and experience in the industry. They make it all about you, run regular loan health checks and offer you a consistent, familiar face throughout the life of your loan. On top of all this – most brokers won’t even charge you a fee! Their payment comes from the lender, and are required by law to disclose the details of these payments to ensure transparency.
Positive influence on interest rates
Another way brokers improve the finance industry is by keeping downward pressure on interest rates. Because getting lower interest rates for their clients is part of their service, lenders know that they have to keep their rates competitive if they want brokers to recommend their facilities to a client. As this incentive usually results in lower interest rates, going to a broker for your finance needs can have both an immediate and longer-term positive impact. Brokers are also a good option for those who might struggle to get finance (due to bad credit, less stable income, poor track record etc.). Generally speaking, lenders are unlikely to approve loans to people who fall into those categories, however with the improved access to finance that a broker offers, there are often ways to get around those roadblocks. The impact this has on the bigger picture is that lenders can give options for those who may otherwise have a hard time obtaining finance, rather than pricing them out with exorbitant interest rates.
Maintaining competition in the finance industry
As brokers have access to multiple lenders and knowledge of the finance industry, competition in the sector is fostered. This reduces the oligopoly that the Big 4 has over the industry, which is a win for consumers. Particularly in the wake of the Royal Commission, with consumer confidence low, many are turning to alternatives to the traditional lenders and seeking finance elsewhere. When competition is strong, all lenders are kept honest, their interest rates tend to remain lower, and brokers are able to give their clients more choice when it comes to loan facilities.
So the next time you’re looking for finance, make sure you see a broker. Not only will you be able to secure the best deal for your circumstances, but you’ll also have a regular point of contact throughout the life of your loan; you’ll have someone reviewing your loans to make sure you’re still getting the most out it; and you’ll be having a positive impact on the sector as a whole. Get in touch with our Finance Team Paul Moran and Paul Tate at McKinley Plowman today on 08 9301 2200 or visit www.mckinleyplowman.com.au/contact-us/ today for a FREE initial consultation.
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