The mortgage industry in Australia has radically changed over the last 25 years. From what was originally a fairly limited and closely held marketplace in the early 1990s, the mortgage landscape is now crowded with a much wider range of overseas banks, specialist mortgage lenders, mortgage aggregators, and brokers.
In days gone by, getting a mortgage invariably involved the intimidating scenario of fronting up at a bank manager’s office hoping to get their tick of approval. Nowadays, accessing housing finance is a much more relaxed process. Mortgage brokers now account for around 54 per cent of new residential home loans and there are around 4,000 mortgage products available.*
But are we any better off?
With this explosion in options for obtaining mortgage finance, it may seem as though we as consumers are benefiting more than ever, but is that really the case? According to a recent report by the Australian Government Productivity Commission, there is still a long way to go.
The report is scathing about the pervasive role that the big banks continue to have in the industry, and the way they are exploiting the confusion within the marketplace about how to get the best deal. The report found that the banks are profiting handsomely from the customer perception that they will be rewarded for being loyal to their chosen bank.
The truth uncovered
On the face of it, a larger range of lenders would imply that there is more competition, choice, and a better deal for consumers. The reality is, however, that many of the so-called specialist mortgage houses — some of which are household names — are actually owned by the banks. This creates the potential for a conflict of interest, where the mortgage lender will naturally favour particular products at the expense of providing truly independent advice that gives the customer the best deal.
The perception of a competitive and consumer-focused marketplace is created by the plethora of advertising and promotion pushed out by a host of different mortgage brands, but in many ways, this is an illusion. The major banks exercise a massive amount of influence because of the stakes they hold in these brands. They are effectively creating the perception that there is healthy competition, when in fact, there is very little.
Many of the “brokers” who operate under these brands have incentives to offer particular products, and therefore do not give genuinely independent advice or a proper competitive assessment of what is the best deal for a particular customer
So how can home buyers win?
In many cases, choosing a home loan is the biggest financial decision that people will ever make, so it is vital that we are as informed and well-advised as we can be. In other areas of financial advice, an adviser is obligated to work in the “consumer’s best interests”, and to give advice based on a proper needs analysis and an unbiased assessment of product options. This is not yet the case for the mortgage market.
All of this means that consumers must be as discerning as possible when it comes to choosing who they deal with. It is simply too big a financial commitment to leave to chance and the wrong choice could end up costing you thousands over the life of a mortgage.
Consumers deserve to get truly unbiased, independent mortgage advice that is not influenced by major institutions, and is not skewed by a need to push a particular brand or product. Fortunately, there is now a way to achieve this!
A better alternative
WYZA Money has recognised the gap in the mortgage market for a more personalised alternative. We have developed a solution that combines an unbiased analysis of mortgage options with a high level of advice and expertise, so that mortgage seekers can get a better result that really does suit their particular needs.
Whether you need help in streamlining documentation, an advocate to help you get your loan over the line, or just want to make sure you get the best possible deal, WYZA Money is ready to give you the advice that puts your best interests first. It’s just another advantage of being part of the WYZA community.