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More people seeking independent mortgage advice


More people seeking independent mortgage advice

Increasing numbers of existing and potential homeowners are seeking the expert advice of mortgage brokers, says Mike Pero Mortgages chief executive Jeff Staniland.

“We have noticed that with house prices and interest rates continuing to fluctuate, more homeowners are seeking independent advice before they commit to a mortgage,” says Jeff Staniland.

Fifty-three percent of people surveyed last year said they would consider using a mortgage broker when taking out a new mortgage or refinancing an existing mortgage. This was up from a figure of 44 percent saying they would consider using a broker in similar surveys carried out in 2002 and 2003.

“There were a variety of reasons why people did not want to use a broker, the most common of which were they were happy with their bank, they preferred to do it themselves, they preferred dealing directly with a bank, or they worked in the finance sector.”

Very few people said they did not know enough about mortgage brokers (only 6 percent) while 7 percent said they had tried a mortgage broker before and decided not to use one again.

“We also found a few people had mistaken ideas about how mortgage brokers work.”

Around 10 percent mistakenly thought that using a broker was more expensive than going direct to a bank, while 7 percent mistakenly thought banks provided better rates than a mortgage broker.

“The NZ Mortgage Brokers Association requires its members to represent at least six lenders and to be independent. Mike Pero Mortgages has relationships established with 16 lenders and provides independent advice to its clients, based on their circumstances and our experience,” says Jeff Staniland.

“We have also found demand for domestic mortgages this year has continued its strong performance, following record months for Mike Pero Mortgages in October and November last year.

“As expected, many people who took fixed mortgages two to three years ago are now having to choose whether to move to a floating rate or refinance on another fixed term,” says Jeff Staniland.

Around 80 percent of home-loans in New Zealand are fixed. While floating rates have moved significantly higher in the past three years as a result of the Reserve Bank’s tightening cycle, fixed rates have been less affected.

“Floating rates are now between 9 and 9.55 percent at most lending institutions, while fixed rates are up to two percentage points lower, depending on the length of the term and the lender.”

“But mortgages are not just about headline rates. A small difference in the headline rate can be more than offset by other charges and fees, as well as any costs associated with exiting the mortgage after a few years, as most people do.”

By the end of its current financial year on the 30th June, Mike Pero Mortgages estimates it will have processed almost $4 billion of home loans in the past year three years alone.

This compares with an estimated $7 billion of home loans in the company’s first 13 years (1990 – 2003)


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