New research* from Aussie Home Loans shows that 84 per cent of people who plan to take out a home loan or refinance in the next 12 months will ‘probably shop around’ for their home loan, while 66 per cent confirmed they are ‘always on the lookout’ for a better home loan deal.
Chief Executive Officer of Aussie, Mr James Symond, said “Our research clearly shows that the current historic low interest rates and hot competition amongst lenders are spurring on both new and existing home loan borrowers to shop around and take advantage of the great deals that are out there.”
According to the research, borrowers are also increasingly considering other ways to get a mortgage. Eight out of 10 people looking for a home loan consider both banks and brokers, however almost two-thirds (64 per cent) of owner occupiers favour using a mortgage broker.
“Borrowers are increasingly savvy about the need to get a second opinion when it comes to making possibly the biggest financial commitment of their lives, and I think this is a really positive trend in such a competitive a market,” said Mr Symond.
Refinancers lacking confidence
Borrowers’ attitudes to home loans aren’t consistent across different segments, with first timers and those looking to refinance feeling very differently about the process.
Despite refinancers and first home buyers (FHBs) being the most likely to shop around (87 per cent and 86 per cent respectively), refinancers feel significantly less confident to compare and select a home loan themselves (53 per cent vs. FHBs 70 per cent).
Refinancers are also less likely to prefer to deal with banks (59 per cent vs FHBs 66 per cent) and are far less likely to believe that all home loan providers are the same (43 per cent vs FHBs 57 per cent).
“It’s interesting to see that refinancers who already have home loan experience are less confident than someone just starting their property journeys. Regardless of experience, my tip for all borrowers is to continue to do your homework because how will you know if you’ve genuinely got the right home loan for your needs with the best possible rate unless you seek more than one opinion?” said Mr Symond.
Social recommendations rise
Despite shopping around more, borrowers are using less traditional research sources such as advertising and online research.
The findings showed social media gained in popularity as a research source, with the percentage of people asking their friends and followers’ advice increasing by 7 per cent. Similarly, the number of borrowers seeking recommendations from friends/family/ colleagues also grew by 5 per cent.
“Unsurprisingly, first home buyers are the most savvy when it comes to seeking recommendations from their social networks both on and offline. While it shouldn’t replace getting expert home loan advice, one person’s good experience is a positive indicator for someone who’s shopping around, so I’m not surprised to see social referrals on the rise,” added Mr Symond.