A tale of two mortgage brokers

Published 15 June 2017

As a property investor, I became worried about the high interest rate I was being charged on my variable-rate home loan, particularly after getting a letter in the mail notifying me of a rise for the third time in the last 12 months.

Anticipating the next move is more likely to be up than down, I finally decided the time was right to refinance and called two mortgage brokers, as the one who handled my existing loan had left the broking industry.

The call with Broker A was brief and appointment-making was straightforward. I was not asked too many questions and I was not told to bring anything to the meeting, which was interesting. Broker B did not respond to my initial call and when he did return my call, I was asked quite a lot of questions and a fixed-rate product was recommended during the call, which was confronting.

Both meetings went well with discussions that were fairly casual. We discussed the details of both my property and current loan, as well as the pros and cons of variable-rate and fixed-rate mortgage products. However, these discussions were only noted on a piece of paper. Broker B did not ask to see the documents that I had brought with me. In the end the broker recommended the same fixed-rate product that had been recommended during the pre-meeting call.

I eventually decided to refinance with Broker A, as the company also offered a cheaper rate for property management services. After informing the broker of my intention to proceed, however, I was then asked to read, fill in, sign and return various documents prior to starting the application process.

Naturally, my first thought was one of inefficiency, as many of these documents could have been completed during the meeting, particularly the fact-find analysis document. Time was also of the essence in securing the fixed rate on offer. All the time spent completing the various documents was therefore time wasted.

Another thought that crossed my mind was whether Broker A has effectively outsourced some of their compliance obligations to me. While I had no reason to doubt that the broker was acting in my best interests at all times, perhaps not enough was done to properly document my needs and goals during the meeting.

At the time of writing this blog, my application has not yet been submitted, leaving me to wonder what could have been if some of these documents were processed during the meeting rather than afterwards. I would likely be in the same position had I gone ahead with Broker B, as the broker did not view the documents that I had brought to the meeting.

Although the insights I gained were based on my experience with just two brokers, it nonetheless reveals that the client experience with mortgage brokers can vary widely.

It also shows that sales channel inefficiencies in the client acquisition process still exist, which could jeopardise client outcomes. These findings reinforce the need for broker groups to conduct regular customer acquisition and compliance benchmarking research to identify and minimise these inefficiencies, as well as client experience research to improve the consistency of the client experience.

CoreData Research

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