Buyers Beware, Compare

MX Sydney, MX Brisbane, 21 September 2007

Matt Sun

Mortgage borrowers are paying up to $1.8 billion a year in brokers fees, research released today reveals.

InfoChoice research has found borrowers pay brokers an average of $1388 annually in fees on a $250,000 loan.

Latest figures show Australians borrowed $860 billion to finance property purchases.

The research, commissioned on behalf of QuickDirect online mortgages, found 40 per cent of existing mortgages are sourced from independent brokers.

"This cost is set to rise with almost 50 per cent of new mortgages expected to be sourced through brokers by year's end," InfoChoice general manager Denis Orrock said.

"While a mortgage broker may offer some benefits, consumers need to realise these do not come free and nor are they cheap, with housing affordability at an all-time low, this is a cost most Australians can ill afford."

Orrock said banks factored in broker commissions when setting up prices.

QuicDirect founder Hamish Carlisle said most customers believed brokers fees were justified to prevent confusion. The internet-based lending company did not need to charge fees as it has lower operating costs.

"Much of the appeal around brokers is that they appear to take the hard work and confusion out of selecting between hundreds of mortgage products in the market," Carlisle said.

Carlisle said rising interest rates, including one more potential increase later this year, and potentially borrowing beyond your means made it extra important to consider all charges, not just broker fees.

"Rather than trust a bank's interest rate at face value, consumers should investigate the comparison rate, which banks are obliged to disclose," Carlisle said.