Consumers baulk at mortgage advice fee for service
Fee for service may work in the financial planning arena but there appears to be significant consumer antipathy in the mortgage broking arena.
In a 2011 Fee for Service Survey, Mortgage Choice found that 61 per cent of the 1,050 potential property buyers surveyed said they refused to pay a fee for seeking advice from a mortgage broker.
When the hypothetical fee-for-service arrangement was altered, 24 per cent of respondents still said they would not consider paying a fee that was fully refundable upon the purchase settlement.
“It is no surprise that the survey respondents leaned very heavily towards not paying upfront fee for assistance that is currently free,” Mortgage Choice chief executive Michael Russell said.
“Although more were willing to pay a refundable fee, the findings still left almost one in four refusing to even contemplate reaching into their wallet,” he added.
Russell said brokers must consider whether their individual businesses and the industry as a whole are in a strong enough position to forego one-quarter of new business.
He said the survey confirmed the suspicion that “the industry is not sufficiently mature to introduce fees without penalising ourselves considerably”. Mortgage Choice has decided to postpone any action on the fee-for-service front until at least the next financial year.
Of those willing to pay, how much was considered reasonable?
The survey found that of the 39 per cent of those prepared to pay a fee for service, 50 per cent would pay between $1 and $250, 32 per cent said between $251 and $500 was acceptable, and 8 per cent would be comfortable paying between $501 and $750. The remaining 10 per cent would be willing to pay more than $750 for mortgage advice.
The Mortgage Choice Fee for Service Survey was commissioned to Ticketek Insights and ran online from 27 May to 6 June, 2011. The respondents were a sample of potential homebuyers from across all states and territories in Australia.
AUTHOR
Mike Taylor
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