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Lender

Most Aussies feel like ‘just a number’ with big banks

by Francesca Krakue7 minute read
The Adviser

The majority of Australians believe a big four bank would not provide the best service for customers facing a crisis, with 34 per cent of Gen X-ers saying that they would head to a mortgage broker first.

The survey, which was conducted by Galaxy Research for non-bank lender State Custodians Home Loans, asked 1,005 respondents who they thought would provide the best service when seeking out or re-negotiating a home mortgage or investment loan if they were faced with a life-changing event.

It found that most Australians (72 per cent) believe that in these circumstances a big bank is not their best option. Additionally, people’s preferences in obtaining property advice in the wake of a crisis differed depending on their current life stage.

While 25 per cent of respondents overall would go to a mortgage broker for advice in the wake of a financial crisis, for Generation X in the 35-49 age bracket, 34 per cent said that they would seek out a mortgage broker first, and 30 per cent of those aged 25-34 would do so.

Of the youngest adults aged 18-24, 22 per cent would turn to a mortgage broker, as would 19 per cent of those aged 50 and over.

Further breaking the results down, 35 per cent of respondents who work full-time said they would turn to a mortgage broker for advice when facing a financial crisis, 20 per cent of those working part-time, and 20 per cent not working. Thirty-five per cent of those who earn over $100,000 would turn to a mortgage broker.

Breaking the results down by state, Western Australian respondents were most inclined to head to a mortgage broker for advice (29 per cent), followed by Queensland and NSW (27 per cent), South Australia (24 per cent) and Victoria and Tasmania (21 per cent).

Meanwhile, 43 per cent of the 18-24 age bracket said that they would turn to a financial planner, accountant or lawyer first compared to 15 per cent of those aged 50 or over.

For those aged 25-34, 34 per cent would seek out a smaller lending institution. This category also had the highest preference for a non-bank lender (16 per cent).

Just over one-third of respondents (37 per cent) said that they believe they’d receive the best level of specialised attention from a smaller lending institution, such as a credit union or building society.

Twenty-eight per cent nominated a big bank, 22 per cent nominated an accountant, lawyer or financial planner, and 10 per cent said a non-bank lender.

The Galaxy survey also revealed that women (32 per cent) were more likely than men (25 per cent) to think that a big bank would provide them better service in times of great need.

Commenting on the findings, State Custodians general manager Joanna Pretty highlighted that Australians are currently facing increasing uncertainty on numerous fronts including a stagnant economy, job insecurity, high levels of relationship breakdowns and unhealthy lifestyles leading to chronic illness.

“When you’re in crisis mode it can be very stressful and confusing trying to make any major decision. I think trust is very important in dire situations and sometimes with larger institutions people can feel like they’re ‘just a number’,” she said. “So, any organisation or people who can give you the right information and reassure that they’ll look after you is important.”

“Smaller institutions tend to specialise with different products and services, and are very good at helping people who fall outside traditional parameters,” she added. “They can also have more of an open mind as to what kind of deal they’d be prepared to do with a customer, as they’re used to evaluating extenuating circumstances.”

 

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Comments (9)

  • My theory on brokers using the big is that most come from one of the big 4, so they know their policies procedures and probably have credit contacts, making their job easier, hence they use them as it suits them...but just my theory.
    1
    • Or are they teaching their new Credit Reps to use a particular lender to gain volume bonuses?
      -1
      • Maybe, but the volume bonus is typically paid to a group and pro-rated to the broker based on their % of the pool - the only thing is how do you know IF you will make that level - as far as I know it's 100% out of your control - so, even if I wrote every loan with say ANZ, and the group didn't hit the target of X, I would get nothing anyway so I can't imagine too many brokers even factoring that into the equation - if you get it, it's a nice little bonus (I think it's quarterly but I am not even 100% sure of that!)
        0
  • Yet 75% of broker business goes to the big four banks.
    1
    • I am not sure on the actual % that you mention above, but sometimes it is a big 4 deal, short term employment, DUA etc - then again, I am not sure how some brokers just put most of their business to 1 or 2 lenders either - be it big 4 or any lender
      1
      • If Mortgage Brokers write 50% of all loans (5 out of 10) and the Big 4 Banks have 80% market share (8 out of every 10 loans) then in theory 4 out of every 8 Bank loans are introduced by Mortgage Brokers. Therefore, 80% of all Mortgage Broker loans go to the Big 4 Banks...

        Credit Reps follow their Mentor's teachings and if they predominately already write the majority of loans with the Big 4 Banks then it stands to reason that this practice would continue. It is up to the Non-Banks, Credit Unions and Smaller Banks to create equivalent to better products, to provide Mortgage Brokers with friendly time saving tools and to ensure that Mortgage Brokers and our clients receive a superior service, before during and after settlement.

        This includes making sure our mutual clients are treated like human beings instead of 'just a number' whenever the Lender is in direct contact.

        Unfortunately the Australian Consumer and the majority of Mortgage Brokers have old ingrained beliefs about the Big 4 Banks, what they stand for and what they can deliver compared to smaller lenders. Thankfully these beliefs will be eroded over time and one day the Government will allow for an even playing field to allow real competition in this current oligopoly market.
        0
        • Oligopoly = Limited competition, there is lots of competition in the marketplace.
          0
          • An oligopoly (from Ancient Greek ὀλίγος (olígos), meaning "few", and πωλεῖν (polein), meaning "to sell") is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers.
            en.wikipedia.org/wiki/Oligopoly
            0
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