Branch versus broker; mortgage customers more satisfied at the bank

Branch versus broker; mortgage customers more satisfied at the bank

Mortgage customers are most satisfied when they obtain their loan directly from a bank branch, recording a satisfaction rating of 78.7 per cent according to Roy Morgan data.

Roy Morgan research found that customers who went through a mortgage broker recorded lower satisfaction levels (74.2 per cent). In terms of mortgage options, brokers were beaten in satisfaction by mobile banking (75.3 per cent) and the telephone (77.7 per cent).

Even amongst newer home loans (held for under six years), satisfaction levels were still higher with those who had gone into a branch (80.9 per cent) versus mortgage brokers (76.1 per cent).

Home loan customer satisfaction: obtained through branch vs mortgage broker


Source: Roy Morgan

There is a significant satisfaction gap between big four bank customers who obtained a home loan in person at a branch compared to through a broker. The largest satisfaction gap was found with ANZ customers at 12.8 percentage points, with those who used a broker having 63.4 per cent satisfaction versus 76.2 per cent for those who used a branch.

Bendigo Bank recorded the highest satisfaction levels for in-branch customers at 91.2 per cent. This was followed by St George (83.2 per cent), Bankwest (81.5 per cent) and Suncorp Bank (79.0 per cent). 

How Aussies are taking out home loans


Source: Roy Morgan

Taking out a home loan directly through a branch is still the most popular channel, accounting for 52.2 per cent of the market. This was followed by mortgage brokers (33.1 per cent), mobile banking (7.6 per cent), over the phone (3.8 per cent) and ‘other’ (3.3 per cent).

Norman Morris, Industry Communications Director, Roy Morgan, says “although mortgage brokers are an important channel for banks to acquire home loan customers, they have received considerable adverse publicity recently in the Finance Royal Commission.”

“As a result it is not surprising given this publicity, that there appears to be a number of issues that are negatively impacting bank home loan customer satisfaction when loans are sourced from them.

“By contrast, customers who obtained their home loan by going in person into a bank branch have higher satisfaction levels than those that use brokers, particularly for the big four banks.

“The data shown here is only a small part of what we have available regarding mortgage customers, their behaviour and satisfaction,” said Mr Morris.

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Learn more about home loans





How much debt is too much?

A home loan is considered to be too large when the monthly repayments exceed 30 per cent of your pre-tax income. Anything over this threshold is officially known as ‘mortgage stress’ – and for good reason – it can seriously affect your lifestyle and your actual stress levels.

The best way to avoid mortgage stress is by factoring in a sizeable buffer of at least 2 – 3 per cent. If this then tips you over into the mortgage stress category, then it’s likely you’re taking on too much debt.

If you’re wondering if this kind of buffer is really necessary, consider this: historically, the average interest rate is around 7 per cent, so the chances of your 30 year loan spending half of its time above this rate is entirely plausible – and that’s before you’ve even factored in any of life’s emergencies such as the loss of one income or the arrival of a new family member.

How can I avoid mortgage insurance?




What is a low-deposit home loan?




Does Australia have no-deposit home loans?




What is Lender's Mortgage Insurance (LMI)

Lender’s Mortgage Insurance (LMI) is an insurance policy, which protects your bank if you default on the loan (i.e. stop paying your loan). While the bank takes out the policy, you pay the premium. Generally you can ‘capitalise’ the premium – meaning that instead of paying it upfront in one hit, you roll it into the total amount you owe, and it becomes part of your regular mortgage repayments.

This additional cost is typically required when you have less than 20 per cent savings, or a loan with an LVR of 80 per cent or higher, and it can run into thousands of dollars. The policy is not transferrable, so if you sell and buy a new house with less than 20 per cent equity, then you’ll be required to foot the bill again, even if you borrow with the same lender.

Some lenders, such as the Commonwealth Bank, charge customers with a small deposit a Low Deposit Premium or LDP instead of LMI. The cost of the premium is included in your loan so you pay it off over time.




What is mortgage stress?





How much can I borrow with a guaranteed home loan?

Some lenders will allow you to borrow 100 per cent of the value of the property with a guaranteed home loan. For that to happen, the lender would have to feel confident in your ability to pay off the mortgage and in the security provided by your guarantor.

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What are the responsibilities of a mortgage broker?





How to break up with your mortgage broker

If you find a mortgage broker giving you generic advice or trying to sell you a competitive offer from an unsuitable lender, you might be better off  breaking up with the mortgage broker and consulting someone else. Breaking up with a mortgage broker can be done over the phone, or via email. You can also raise a complaint, either with the broker’s aggregator or with the Australian Financial Complaints Authority as necessary.

As licensed industry professionals, mortgage brokers have the responsibility of giving you accurate advice so that you know what to expect when you apply for a home loan. You may have approached the mortgage broker, for instance, because you have questions about the terms of a home loan a lender offered you. 

You should remember that mortgage brokers are obliged by law to act in your best interests and as part of complying with The Australian Securities and Investments Commission’s (ASIC) regulations. If you feel you didn’t get the right advice from the mortgage broker, or that you lost money as a result of accepting the broker’s suggestions regarding a lender or home loan offer, you can file a complaint with the ASIC and seek compensation. 

When you first speak to a mortgage broker, consider asking them about their Lender Panel, which is the list of lenders they usually recommend and who may pay them a commission. This information can help you decide if the advice they give you has anything to do with the remuneration they may receive from one or more lenders.

How do I take out a low-deposit home loan?



What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor.