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The mortgage broking industry has made the mistake of selling itself on cheaper rates rather than stress management, according to one customer service expert.
Martin Grunstein, a professional speaker on customer service, said although borrowers want a cheap home loan, what they most want is to be guided through the daunting mortgage process.
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Mr Grunstein said although clients often enter a broker’s office demanding the best price, what they most value is being relieved of the stress and anxiety that comes with a home loan.
He said brokers can reassure their clients by being contactable 24 hours a day, running interference with the bank and connecting them to a network of trusted professionals.
“The more the broker can do that, the less critical the interest rate of the loan is,” Mr Grunstein told The Adviser.
“Once the broker has done the job well the first time, if they keep in touch with that borrower and they refinance, that client is much less price-sensitive the second time because they know they had a good experience dealing with that broker.”
Mr Grunstein said the reason borrowers are so focused on interest rates is because the industry has conditioned them to think that way.
“If you listen to any advertising – brokers or banks – all they talk about is interest rate,” he said.
“Most people wouldn’t know their home loan interest rate if you asked them. But it’s all the banks and brokers talk about, so of course the customer is going to be interest rate-focused.”
Mr Grunstein said the best way for brokers to differentiate themselves from rivals is to focus on building relationships rather than selling interest rate-driven transactions.
“If the only issue of differentiation is the interest rate of the loan, then it becomes a commodity, and commodities are sold on price,” he said.
“As soon as someone comes up with a better home loan interest rate, you will lose that customer to the person who is offering a better home loan interest rate.”
[Related: Broker of the Year avoids discussing rates]
