Thursday, July 19, 2012

Misconceptions of Brokers

An article by
Caroline Dann of BrokerNews

20/07/2012 7:30:00 AM



Consumers' Misconceptions of Brokers

Consumers believe going direct to the bank will secure a better deal, according to new research.
A Loan Market survey of brokers found the two biggest misconceptions:

1. that a direct-to-bank approach results in a cheaper loan.

2. that broker services came at a cost.

Loan Market spokesperson Paul Smith said it was crucial consumers know the value of using brokers, not only to secure a good deal but to utilise their experience in the market.
“The reality is that a mortgage broker can negotiate your needs between several lenders and uncover discounts not available to those shopping on their own,” he said.
However, new research shows nearly 50% of home loans are written through mortgage brokers, showing a shift in attitudes of lenders.
“The banks and lenders are moving to recognise mortgage brokers as a preferred distribution network for mortgages because of the number of customers using them and the fact there are no fixed costs associated with brokers such as a branch facility,” he said.

My personal experience:
I recently went into a major bank to get my Corporate Credit Card changed to a Business Credit Card.  I thought it was quite a simple thing to do . . . . .just needed the product switched.

I was served by a branch loans processor who had
  • No idea what they were doing,
  • Limited English skills and
  • No experience in business lending
It got so bad I literally had to spell out business terms such as "depreciation"  and "addbacks". 
After the loan was declined. I did not even realise I was makeing a formal application, nor did I sign anything including a mandatory privacy form.

I was advised I would need to speak to a business lender.  It took me 2 weeks to arrange a meeting with the Business Specialist. She seemed a little more knowledgable and was then told they will speak to someone and get back to me in 2 days. That was over 3 months ago, and although I have left emails and phone calls and I still waiting for some help  . . .  .

1. Why did I go into a Branch?
2. Why would you?