In response to an ill-informed weekend news article that claimed mortgage brokers fail to adequately disclose to customers the commissions they receive from lenders, CEO of Australia's largest independently-operated mortgage broker, Michael Russell from Mortgage Choice, seeks to set the record straight.
"It is important to set the record straight to reassure Australian property buyers that contrary to the misinformation that was published over the weekend, licensed mortgage brokers are most certainly working in customers' best interests. Furthermore, there is legislation in place to enforce that mortgage brokers are acting appropriately," said Mr. Russell in an issued statement.
Under the National Consumer Credit Protection Act, it is compulsory for all mortgage brokers to be licensed and to fully disclose to a customer any commissions paid on their housing loan, explained Mr Russell.
Consumers should most definitely do their own research before deciding on which mortgage broker to use. Mr. Russell added that consumers can be assured that ASIC oversees stringent national legislation that imposes strict obligations on mortgage brokers to always make lender and product recommendations that are aligned to customers' requirements, objectives and financial circumstances.
"The weekend media article also suggested that home loan borrowers are being charged thousands of dollars in extra interest as a result of commissions being paid to their mortgage broker. Such comments are inaccurate and misleading. Categorically, there is no premium added by lenders to their published mortgage interest rates to compensate for paying mortgage broker commissions," Mr Russell said.
"It is widely publicised that lenders pay mortgage brokers an upfront commission for arranging a loan plus a trailing commission for looking after the customer throughout the life of that loan. Customers are not penalised in any way for using a mortgage broker as opposed to going direct to that same lender.
"While commissions vary between lenders, Mortgage Choice has addressed this by our 'Paid the Same' policy, which ensures that we pay our brokers the same commission rate, regardless of the commission rate paid by the lender. This means we are truly working in our customers' best interests."
Operating in customers' best interests
"Mortgage brokers play a vital role in taking the legwork out of finding the most suitable home loan by searching the vast array of options available through their particular panel of lenders. It is in the customer's best interests to take the opportunity to shop around," said Mr Russell.
"The fact that the Australian mortgage broking industry has come so far in 20 years, and that it now facilitates over 40 per cent of all home loans written is testimony to the value, choice and disclosure it delivers to customers.
"Our industry continues to thrive on the back of thousands of customer-focused mortgage brokers who work passionately for their customers first and foremost. These dedicated professionals have earned respect for their hard work and credibility and it is imperative that the record be set straight."