The Australian Securities and Investments Commission (ASIC) has released new research, titled Looking for a mortgage: Consumer experiences and expectations in getting a home loan, as part of a study based off its observations of 300 consumers who were in the process of taking out a home loan, as well as a survey of an additional 2,000 consumers.
The research was designed to examine consumer decision-making in relation to home loans to identify what factors influenced their determination.
According to ASIC, the key findings of its research were:
- consumers who visit a mortgage broker expect the broker to find them the “best” home loan
- mortgage brokers were inconsistent in the ways they presented home loan options to consumers, sometimes offering little (if any) explanation of the options considered or reasons for their recommendation
- first home buyers were more likely to take out their loan with a mortgage broker.
Further, ASIC’s research found that consumers taking out a loan directly through a lender were “more likely to be a refinancer or have had previous experience taking out home loans” and also “valued convenience”, with 69 per cent taking out their loan with a lender they had an existing relationship with.
The regulator also noted that one in five consumers said they believed they could have secured a better interest rate on their home loan or were not sure whether they had received a good rate.
Following the release of the report, commissioner Sean Hughes said: “A home loan is one of the most important financial commitments a consumer will make. Lenders, brokers and aggregators must step up to make it easier for consumers to meaningfully compare loan options and for brokers to communicate how a home loan option has been selected for them.
“ASIC strongly supports the recent government announcement to enact a best interests duty for mortgage brokers. Importantly, the implementation of such a duty will align the role of brokers to the reasonable expectations of consumers.
“Our research also suggests that some consumers are taking out home loans when cheaper alternatives may well exist. We are working with other regulators to develop a new home loan interest rate tool to improve price transparency for consumers to compare options. We expect this tool will be made available on ASIC’s MoneySmart website next year.”
The release of the research came a day after ASIC announced in its Corporate Plan for FY20 to FY23 that it would be “examining mortgage broker accountability for home loan recommendations” and whether such recommendations “align with consumer requirements and objectives”.
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Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.