MoneyQuest rebuffs claims made against mortgage brokers
Melbourne, 14 August 2017: Investment banks aren’t in touch with the home loan market in Australia says leading broking group.
Michael Russell, Managing Director of national broking group MoneyQuest cautions organisations against passing judgement on key participants in Australia’s residential mortgage market without first having a thorough understanding of the market.
In particular, Mr Russell’s rebuff is directed at a May 2017 research report by investment bank UBS looking at mortgage brokers and their impact on home loan pricing.
Mr Russell said, “The UBS research paper is littered with financial miscalculations, incorrect assumptions and, by default, invalid conclusions.”
“Here in Australia, many of those who work within our large institutions, and especially those in the wholesale rather than retail market, have a poor understanding of how the mortgage market works in practice. To make it worse, very few have been exposed to a mortgage market absent of competition and where the concept of “best consumer outcomes” was not even a pipedream” noted Mr Russell.
“I have and it’s nothing to get behind the wheel of a DeLorean and rush back too”.
Of particular concern are two statements made in the UBS report, which Michael Russell believes amplifies significant flaws within the research.
“Firstly, UBS concludes that mortgage broking remuneration adds 0.16% to the cost of the average home loan. This comment implies that banks can acquire additional customers at no extra cost, which of course defies long-standing business theory”, notes Mr Russell.
“However, the greatest insight into the lack of understanding investment banks have, is reflected in the UBS comment “Advice for a commoditised, single product such as a mortgage can be easily provided by robo-advice,” added Mr Russell. “Yes, home loans are a simple commoditised product. But individual home buyers are not.”
“As all mortgage professionals know, no two home loan customers are ever the same. Not only does robo-advice fall short of advice delivered where the provider has invested time getting to know individual clients, but lender credit policies are a long way from narrowing to accommodate robo- advice. Australian homebuyers deserve quality advice that is personalised and provided by a skilled and professional mortgage adviser.”
Mr Russell adds, “On Friday, UBS has commented that the Commonwealth Bank of Australia is intent on reducing its reliance on brokers and reducing commissions paid to brokers. I suspect this view may have been drawn from the same pool of questionable research previously published. Australian home loan lenders have long afforded consumers the option to select their home loan channel of choice and I do not see this changing anytime soon”.
Established in 2007 and franchised in 2016, MoneyQuest was founded with a clear goal – to make property ownership easy and rewarding for everyday Australians. MoneyQuest has over 50 offices across Australia helping thousands of families and investors build their financial future – from first home ownership right through to retirement. More information on www.moneyquest.com.au. Money Quest Australia Pty Ltd – Australian Credit Licence 487823.
For more information:
MoneyQuest firstname.lastname@example.org (03) 9583 6598
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