Ian Thorpe, Australia's greatest Olympian, has become a mortgage broker, of sorts.
The former world-beating swimmer is a partner in a new website, launched yesterday, that matches banks and mortgage lenders with potential borrowers.Once a borrower is registered on the site, lenders bid in a live auction for the right to lend that person money, offering the cheapest rate they can to win their business.
Called ziggy-bid it runs on a similar principle to eBay, except the bidders are the lenders, and they're competing for business by offering low rates and promising excellent service. "I'm so excited by it," Thorpe said. "I was introduced to the concept about a year ago and loved it. It takes away all of the daunting elements about applying for a mortgage and introduces healthy competition into the market as the banks vie for your business."
Home buyers and investors simply register their details on the site, including some basic information about income and outgoings, type or property and rough location, and then stipulate a time frame of between one and five days as a deadline for receiving lenders' bids.
Fifteen lenders have signed up, including all the big banks.
"The longer you give lenders to assess your situation, the better your rate is likely to be, but it does give you the option of asking for a very quick decision," Thorpe said.
"You then get to pick from the best rate or the best service, because we also rate each lender on a customer service basis - usually about how quickly the lender will approve loans and the feedback we get from other borrowers - just like eBay.
"And we also calculate what we call a 'ziggy-rate', which takes into account all of the fees and enables you to accurately compare the true cost of the mortgage. It's all very clever and transparent."
The site runs on similar lines to bid-my-loan which also allows lenders to bid for borrowers' business, but not usually in such short time periods.
Showing posts with label Selecting a mortgage broker. Show all posts
Showing posts with label Selecting a mortgage broker. Show all posts
Sunday, November 23, 2008
Wednesday, April 25, 2007
How to spot an honest mortgage broker to source your home loan
Specialist mortgage sellers still have a lot of work to do to rehabilitate their image.
Seeking to change perceptions that some mortgage brokers are nothing more than commission-driven salespeople, the Mortgage and Finance Association of Australia has released the results of a shadow shop that shows its members in a more positive light.
Market researcher brandmanagement conducted the secret survey where real shoppers made 104 visits to brokers throughout Australia. The shadow shop was restricted to MFAA members, which paid for the study.
"Brokers were rated above average across all areas of the services they provide, performing particularly highly when it came to customer focus, knowledge of products and honesty and integrity," says MFAA chief executive Phil Naylor.
"The mystery shop also confirmed brokers are living up to their reputation for providing a friendly and personable service, with consumers giving high performance ratings to these soft skills."
He says perceptions of brokers not disclosing commissions are challenged by the shadow shop. Under the MFAA's code of practice, members must disclose their commissions to the borrower.
None of the shadow shoppers entered into a contract with the broker to act on their behalf and so, under the association's rules, the brokers were not required to disclose commissions but 62 per cent did so anyway.
However, brandmanagment managing director Andrew Inwood says the study shows there is plenty of room for improvement.
He says brokers who disclosed commissions tended to minimise their impact. "They talk it down; they still feel uncomfortable talking about how they are paid," Inwood says.
He also says that where shoppers were expecting the broker to present them with a choice of suitable mortgages, in 24 per cent of shadow shops, they were recommended only one mortgage.
When the shoppers discussed interest rates and repayment amounts, two-thirds of shoppers said there was no discussion using comparison rates. These are calculated after adding fees and charges to the lender's advertised rate so that the true cost of loans can be compared.
Consumers often approach mortgage brokers because of the complexity of products and anxiety about debt, in the hope they will find the best loans.
In only 5 per cent of face-to-face meetings were the shoppers given details of the Credit Ombudsman, which is where the shoppers go if they have a complaint against a broker.
Inwood says in about one third of the shadow shops, the shoppers felt that the broker was recommending they take out larger loans than they needed.
Brandmanagement has conducted numerous shadow shops of the financial services industry. Inwood says brokers are rated more highly by consumers than bank staff or financial planners. He suspects that one of the reasons for that is mortgage brokers are giving advice that is more straightforward and limited than financial planners. He says when consumers go to a bank they may be offered only the mortgage package the bank is promoting at the time and follow-ups on consumer enquiries can be slow. Brokers, however, have very good response times.
Nick Coates, finance spokesman at consumers' association Choice, says the brandmanagement study does not evaluate the appropriateness of the mortgages recommended to the shoppers.
Choice released the results of its own shadow shop of mortgage brokers in February. The findings showed the advice brokers gave on reverse mortgages was riddled with "glaring deficiencies".
Choice found most brokers, who garner commissions based on the size of the loan, provided a poor standard of advice.
Concerns have also been growing over brokers marketing "mortgage reduction" services, which are pitched at those consumers who are finding it hard to make ends meet. While the brokers say they have strategies to eliminate mortgage debt quickly, consumers often end up with larger debts because of the fees and higher-cost loans.
Coates says a further area of concern is the sale of "no doc, low doc" loans sold by some brokers. Low documentation loans are taken out by people who have a chequered credit history or the self-employed who fail to meet the usual lending criteria.
All these dangers areas for consumers were outside of the scope of the brandmanagement study.
It was mostly about the shadow shoppers' perception of the brokers' "soft" skills such as friendliness, and service aspects such as the time it took for the broker to respond to an enquiry and some compliance issues.
The results of a shadow shop of financial planners and the advice they gave on switching superannuation funds, conducted by the Australian Securities & Investments Commission and released in 2005, showed consumers are poor judges of the quality of the financial advice they receive.
Coates suspects consumers are also likely to be poor judges of the recommendations they receive from mortgage brokers.
He says no amount of codes of practices obviates the need for a national regulatory framework through which brokers have to be licensed and where the licences can be taken away from brokers not acting in consumers' interests.
The MFAA supports and continues to lobby for a national regulatory regime. Brokers are covered under the credit laws of each state and territory. In 2003, the federal, state and territory governments agreed to produce uniform regulation.
The NSW Government has released details of pending reforms which are regarded as the best template for national regulation.
They require mortgage brokers to be licensed or registered, to undergo probity checks, be members of an approved dispute resolution scheme and have compensation arrangements. But a national approach to effective consumer-friendly regulation is still a long way off.
Source: The Age
Seeking to change perceptions that some mortgage brokers are nothing more than commission-driven salespeople, the Mortgage and Finance Association of Australia has released the results of a shadow shop that shows its members in a more positive light.
Market researcher brandmanagement conducted the secret survey where real shoppers made 104 visits to brokers throughout Australia. The shadow shop was restricted to MFAA members, which paid for the study.
"Brokers were rated above average across all areas of the services they provide, performing particularly highly when it came to customer focus, knowledge of products and honesty and integrity," says MFAA chief executive Phil Naylor.
"The mystery shop also confirmed brokers are living up to their reputation for providing a friendly and personable service, with consumers giving high performance ratings to these soft skills."
He says perceptions of brokers not disclosing commissions are challenged by the shadow shop. Under the MFAA's code of practice, members must disclose their commissions to the borrower.
None of the shadow shoppers entered into a contract with the broker to act on their behalf and so, under the association's rules, the brokers were not required to disclose commissions but 62 per cent did so anyway.
However, brandmanagment managing director Andrew Inwood says the study shows there is plenty of room for improvement.
He says brokers who disclosed commissions tended to minimise their impact. "They talk it down; they still feel uncomfortable talking about how they are paid," Inwood says.
He also says that where shoppers were expecting the broker to present them with a choice of suitable mortgages, in 24 per cent of shadow shops, they were recommended only one mortgage.
When the shoppers discussed interest rates and repayment amounts, two-thirds of shoppers said there was no discussion using comparison rates. These are calculated after adding fees and charges to the lender's advertised rate so that the true cost of loans can be compared.
Consumers often approach mortgage brokers because of the complexity of products and anxiety about debt, in the hope they will find the best loans.
In only 5 per cent of face-to-face meetings were the shoppers given details of the Credit Ombudsman, which is where the shoppers go if they have a complaint against a broker.
Inwood says in about one third of the shadow shops, the shoppers felt that the broker was recommending they take out larger loans than they needed.
Brandmanagement has conducted numerous shadow shops of the financial services industry. Inwood says brokers are rated more highly by consumers than bank staff or financial planners. He suspects that one of the reasons for that is mortgage brokers are giving advice that is more straightforward and limited than financial planners. He says when consumers go to a bank they may be offered only the mortgage package the bank is promoting at the time and follow-ups on consumer enquiries can be slow. Brokers, however, have very good response times.
Nick Coates, finance spokesman at consumers' association Choice, says the brandmanagement study does not evaluate the appropriateness of the mortgages recommended to the shoppers.
Choice released the results of its own shadow shop of mortgage brokers in February. The findings showed the advice brokers gave on reverse mortgages was riddled with "glaring deficiencies".
Choice found most brokers, who garner commissions based on the size of the loan, provided a poor standard of advice.
Concerns have also been growing over brokers marketing "mortgage reduction" services, which are pitched at those consumers who are finding it hard to make ends meet. While the brokers say they have strategies to eliminate mortgage debt quickly, consumers often end up with larger debts because of the fees and higher-cost loans.
Coates says a further area of concern is the sale of "no doc, low doc" loans sold by some brokers. Low documentation loans are taken out by people who have a chequered credit history or the self-employed who fail to meet the usual lending criteria.
All these dangers areas for consumers were outside of the scope of the brandmanagement study.
It was mostly about the shadow shoppers' perception of the brokers' "soft" skills such as friendliness, and service aspects such as the time it took for the broker to respond to an enquiry and some compliance issues.
The results of a shadow shop of financial planners and the advice they gave on switching superannuation funds, conducted by the Australian Securities & Investments Commission and released in 2005, showed consumers are poor judges of the quality of the financial advice they receive.
Coates suspects consumers are also likely to be poor judges of the recommendations they receive from mortgage brokers.
He says no amount of codes of practices obviates the need for a national regulatory framework through which brokers have to be licensed and where the licences can be taken away from brokers not acting in consumers' interests.
The MFAA supports and continues to lobby for a national regulatory regime. Brokers are covered under the credit laws of each state and territory. In 2003, the federal, state and territory governments agreed to produce uniform regulation.
The NSW Government has released details of pending reforms which are regarded as the best template for national regulation.
They require mortgage brokers to be licensed or registered, to undergo probity checks, be members of an approved dispute resolution scheme and have compensation arrangements. But a national approach to effective consumer-friendly regulation is still a long way off.
Source: The Age
Subscribe to:
Posts (Atom)