The news over the past week has created a strange anomaly. One day there was the story of how the banks were dominating the market for new mortgages, with the Commonwealth Bank writing 27 per cent of all new mortgages. Yet the next day, a survey of customer satisfaction among people with mortgages showed the greatest dissatisfaction with the Commonwealth Bank.
What does this mean? I’m not anti-bank, and I have nothing against the Commonwealth. My response to these two pieces of information is to assume that Australians have backed themselves into a corner where they are making ‘choices’, but not ones they are happy with. Let’s go back a few years, to the mid-1990s, when I had a company called Wizard Home Loans.
We offered lower interest rates, more flexible products and we operated through a network of brokers who formed close relationships with their customers. Along with Aussie and Rams, Wizard helped to bring non-bank lenders to 15 per cent share of the mortgage market by 2003. This happened because consumers wanted greater choice, lower rates and a personalised service that banks could not provide. Now, non-banks have shrunk to 1 per cent market share.
There’s less choice. In between was the GFC; in its wake, consumers fled to the perceived security of the big banks, and non-banks had problems getting reasonably-priced funding because of a liquidity crisis in the banking system. So what can home borrowers do now, other than simply be dissatisfied with their current lender? I suggest you keep it simple: research, communicate, act!
Start by knowing the market you’re in. Just as you compare the prices and features of cars, refrigerators, washing machines and lawn mowers, so too must you be on top of the mortgage market. Go on the websites and compare your mortgage with other lenders. Stop at the store front windows of lenders in the high street and see what they’re offering. If you’re pressed for time, go to a mortgage broker – see what they bring back to you. You might be surprised at what the lesser-known and non-bank lenders can do for you.
Armed with knowledge, you must communicate with your lender. This is not a showdown – it’s a conversation where you make the lender aware of the better rates and products available. Many lenders will match – or almost match – the other lenders. But if this doesn’t happen, you must act! This can be scary for some Australians, and if it seems too much, I suggest you use a mortgage broker. But act you must because that’s how markets operate. And when no one acts, we have a situation where the most popular lender also creates the most dissatisfaction.
* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on mark.neos@ybr.com.au with any queries you may have or check www.ybr.com.au for your nearest branch.
