Podcast: Special Guest: Mortgage Broking Trends & How to Find a Good Mortgage Adviser | Ep. 240

Posted by Ed McKnight on 11/05/20
Mortgage Broking Trends How to Find a Good Mortgage Adviser 001
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Show Notes

What's Covered in the Show?

In this episode, we are joined by Darcy Ungaro from the NZ Everyday Investor Podcast. Within the show we pick up on the trend where more New Zealanders are using mortgage brokers. ANZ has announced that almost 50% of their new lending is through mortgage brokers.

We discuss why this trend is occurring and how to pick a good mortgage broker.

If you are keen to listen to a recent NZ Everyday Investor Podcast episode with Andrew and Ed, then click here if you listen on Apple Podcasts, or here is you listen on Spotify.

Transcript

Transcript of the Podcast

Ed McKnight: Hello and welcome along to the Property Academy podcast. I'm your host, Ed McKnight, and I'm Andrew Nicol, and I'm Darcy Ungaro and today on the show we're talking about a growing trend that we're seeing within finance for mortgages, and it's the fact that more and more people are using mortgage advisors, and this is just something that we've picked up across a couple of different articles.

I recently read and actually, I think it's the mortgage broking magazine, and that shows how nerdy we are, that at ANZ's business or new business is nearing 50% from mortgage brokers. So instead of going into your ANZ branch, which you can't do anyway at the moment, or applying online, more and more people are using mortgage advisors. And Darcy, I know you've got an interesting stat about BNZ.

Darcy Ungaro: Hmm. Yeah. It wasn't that long ago where BNZ didn't use mortgage advisors at all. So when I first started in the industry, they did use mortgage advisors and then they just, you know, they went cold on us. They shut it down and they only want it to go direct. And they had a big campaign around them.

And then a few years back, they turned back on the tap and now it went from zero to almost a third of new mortgages are originated via the mortgage advisor channel. So it shows that people want it right.

Andrew Nicol: The interesting thing about that, I remember I was working at the BNZ approving mortgages when they made the decision to get rid of brokers. And the kind of the messaging that they used at that time was that mortgage brokers were the devil and not to be trusted. And they only offered a select amount of products to mortgage brokers as well.

So they're limited things like the Flybuys mortgage and the tailored home loan, kept them internally. And as a result, they only got about 5% of their mortgages through mortgage brokers, despite being one of the first bank to set up with Mike Pero mortgages originally when Mike Pero first started out, and so they cut off brokers while I was there, told me that they were devils, and then I decided I'd become one, and turned to the dark side.

Ed McKnight: That was probably something that made you leave the bank Andrew.

Andrew Nicol: Absolutely.

Ed McKnight: Now, another interesting stat that we've seen as well before we kind of dig into some of the reasons why is that in Australia, it's really interesting that about 40% of younger people are willing to use a mortgage broker, but a lower percentage of kind of older and more senior people are using mortgage brokers. So we are seeing this trend where younger people are more inclined to use a broker.

Darcy, do you have any comment on why that might be or why these trends are occurring.

Darcy Ungaro: I've totally observed that as well, right? Like I think as soon as I will come across a client who might be, say, I don't know, 50 years old or older, it's different because they have a different mindset. And I think it's this notion that you have a relationship with your bank.

You know, you've got this old school bank manager maybe handed down from your parents and you have this sense that, right, if you've developed a good relationship with this bank manager, they'll take care of you, your loyalty will be rewarded. They'll have your back and they'll watch out for you. And they have that notion. It's really hard for that notion to kind of die. But it hasn't. It's a bit of a myth. And, I think the younger people realise that, older people, not so much.

Ed McKnight: And I think as well that that probably comes back to the last thing we said at the end of yesterday's podcast, which is one of the reasons behind this is the bank managers and the branch networks are becoming less and less important and more of it is centralised. Is that a trend you're kind of observing as well Darcy?

Darcy Ungaro: Absolutely. It's kind of like this homogenous sort of application of their policy rather than individuals having their own discretion and making their own judgment calls. It very much comes from a centralised place now, and it's really just places of origination where these loans come from, that they look at it.

So it's not decentralised way of making decisions. It's very much centralised and it kind of, maybe it's on purpose, maybe it's just the natural evolution of thing, but I think the next stage that the banks are going to kind of really start to push forward with is this whole digital direct channel as well.

Andrew Nicol: What do you think the main difference between using a mortgage broker and going to the bank boils down to Darcy? What would you, what would you say?

Darcy Ungaro: Two things. Advice and choice. So, you know, the bank is awesome at answering a question and providing a solution, but how do you know what the question is? How do you actually know everything else associated with buying a property? It's not a, you know, we go here for that and here for that sort of thing. It's very much a very murky space when you're buying a property, you need to pull advice from all sorts of different places.

And a mortgage advisor is the best position to give you, not just the options from one bank, but the options from multiple banks. And as well as that, they can kind of loop in with your lawyer, the real estate agent, you know, depending on the advisor that you're working with, they can also develop an overall strategy so that you know why you're doing it and what your other options are. So, yeah, that's in a nutshell, I think.

Andrew Nicol: And that's great. That's exactly what I would've thought. And one thing that I just wanted to make clear for listeners is that the financial advisors regulation has timed up significantly over the last few years.

And so, mortgage, sorry, mortgage advisors at the bank fall under the category of being QFEs, and you know, mortgage broker would be at an RFA or an AFA. Can you just explain to our listeners what each of those mean and sort of the level of experience you might expect from those people?

Darcy Ungaro: Yeah, sure. So, yeah, the QFE advisors and a lot of these terms, they're going to disappear in about a year now. They were supposed to disappear like right now, but with current events, that's going to be pushed out by another year at least.

And so, when you're dealing with a quote unquote financial advisor that is working at a bank branch, they're called a QFE advisor, are qualifying financial entity advisor, and they're able to give you all sorts of advice in relation to just the products and services at that bank their employer is able to give you, so they're able to give you some advice, but it's restricted to who their employer is.

Then you have a registered financial advisors, or RFAs and every mortgage advisor that you deal with almost will be an RFA and they are allowed to work in mortgages and insurance, and they're able to do what's called class advice on KiwiSaver.

And then you have AFAs, which is what I am authorised financial advisor, and they're able to do all that, but also do financial planning services and give you advice on investments as well.

Ed McKnight: And Darcy, one of the things I really am interested in is how do you tell if you're evaluating mortgage advisors or mortgage brokers, you know, and people are listening to this and saying, okay, I want to go and find one because I want to buy a property or do XYZ.

How do you tell the good ones from the bad ones? What do you look for if you're going to start looking for a mortgage advisor, because as you said, you've got to ask the right questions when you go into the bank. But of course you've got to ask the right questions to figure out which mortgage advisor is going to be best for you, because that's going to be different for each different person.

So how do you find a good mortgage advisor other than of course, just going straight to you?

Darcy Ungaro: That's such a good question Ed, and I think that's like, there's so much, in that, that I can't really cover all of it, but I think the main thing is, is that you, you need to actually not be afraid to give a few a call and actually get a recommendation.

I get a lot of business from people putting questions out there on Facebook, and then I might be one of three people that get inquiries from, and most mortgage advisors are more than happy to have a quick off the record chat on the phone where you can kind of just feel them out and make sure that you're comfortable with who they are as a person, how they work.

Some charge fees most are free. What's the difference and why you got to ask all these questions up front before you agree to engage them. I think that most people, when they use a mortgage advisor, they will probably be recommended them by a friend, maybe it's a real estate agent, seldom a bank, but they'll be recommended them.

But I think that more and more going forward, people are actually going out there on social media. They're looking out for podcasts and other content that the advisor is putting out there, getting comfortable with who they are first before they approach them. And I think that's really wise because you're going to be forming somewhat of an intimate relationship with them.

You're going to be telling them all your numbers, right, and more, so don't you want to know who they are a little bit and get comfortable before you commit with them? Of course you do.

Andrew Nicol: Absolutely, and I think the biggest thing there is that people need to remember, it's not just about getting a loan and it's not about getting the cheapest interest rate. It's about getting the best advice and having an ongoing relationship with someone that's going to be able to grow with you, and that's why when we choose brokers for our clients to deal with, we're really specific that people understand investment property, they understand the right structures to use, they understand the advice that we would give, so it's complimentary and that just works to a far better experience for the client.

And it allows them to be more wealthy in the future because they're able to borrow more money and be more strategic with how they're running their accounts and their mortgages and everything like that.

Darcy Ungaro: Totally.

Ed McKnight: Fantastic. Well, let's wrap it up there, but please don't forget to rate, review and subscribe to the podcast. It really does help us get the message out to more people. And of course, if you are interested in learning about all types of investment, then why not check out the NZ Everyday Investor podcast, that's Darcy's podcast. I'll link to that in the show notes. So, tap or swipe over the cover art, it'll take you right there. Or you can also just search by NZ Everyday Investor podcast in your favourite podcast listening app.

Thanks for listening to the Property Academy podcast. I'm your host Ed McKnight, and I'm Andrew Nicol, and I'm Darcy Ungaro, and we're going to be back again tomorrow with even more daily strategies, tactics, and insights to help you get the most out of the New Zealand property market.

Until next time.