Service is the key

Once again, two and a half million mortgage holders watched and waited last week as the Reserve Bank announced their monetary policy decision.

The interest rate we pay on a home loan is very important, but a mortgage is not only about price: there's also features and service to consider.

The price of a mortgage can differ by around 1 per cent in Australia, with the major banks at the high end and the non-banks and credit unions at the lower priced end of the spectrum. Features that differentiate mortgages can include the ability to pay fortnightly, the 100 per cent offset loan account and redraw facility.

But depending on your situation, service might be equally if not more important.

Most borrowers admit they need advice, guidance and management with a mortgage and bankers once formed relationships with the people they approved for a mortgage, giving advice and contacting customers personally if the loan was in arrears.

When the 1990s started, and hundreds of bank branches were being shut down, 'relationships' became less efficient than transactions.

Transactions were easier to offer with the use of technology, hence the rise of call centres, ATMs, internet banking and now, iPhone apps.

But Australians never relinquished the importance of service in a mortgage. When I founded Wizard 16 years ago, high-paid American banking consultants advised us to have no branches but lots of call centre and internet access.

But the borrowers wanted service. They wanted a branch, a manager who took an interest in their circumstances, and a mortgage provider that was part of the community.

We built branches, trained loan managers who became small business owners and emphasised that a mortgage was a relationship in which both the lender and the borrower were invested. By 2003, the non-bank lenders had taken 15 per cent of the Australian mortgage market.

We have also seen the rise of mortgage brokers since the mid-1990s as borrowers sought out an actual person to give guidance. Brokers now account for around 43 per cent of all new mortgages in this country.

Even now at Yellow Brick Road, service is at the centre of the proposition - at a time when technology is king.

So, I think there will always be people who want banking services on their smart phone, and who want to talk to a call centre while they wait in traffic - and that's ok. But for many Australians, their mortgage is too big a deal to transact through cyberspace. They want a relationship with someone who's an expert, someone they trust and who is part of the world they live in.

So I encourage Australians to declare that service is important to them, and to insist on a mortgage where customer care is just as important as a great rate.

Service is not dead, but you do have to make a choice.

* Mark Bouris is the Executive Chairman of Yellow Brick Road. Email Mark: mark.neos@ybr.com.au with any queries you may have.