How to save $6,000 on your loan this election year

“Labor appears to have had a knee-jerk reaction to the recommendations of the banking royal commission, which will be bad news for consumers,” Mr Perks said.

With the royal commission’s final report suggesting changes to fees and trailing commissions, Mr Perks said a change in government could see a shake-up in the mortgage industry.

“I don’t have a problem with fee-for-service-paid mortgage brokers, or commission-paid mortgage brokers; however, banning mortgage broker commissions, in my opinion, will lead to less competition and higher home loan interest rates for borrowers,” Mr Perks said.

“I’m not convinced banks will reduce their interest rates to align with the removal of commissions, and certainly not for the long term.

“Whether lender-paid commissions continue or not, I’m calling for that choice to be given to consumers; home owners and home buyers should be given, at the time they are looking for a home loan, the choice to decide of paying an upfront fee or having the bank pay the brokers fees wrapped up in an interest rate.”

This then, he said, will leave property owners and buyers the choice to see how their own situations compare to the costs and benefits of products available for them.

“It’s not that difficult; they should be able to choose whether they opt in or opt out of a commission-paid home loan,” he said.

“Having this choice, most importantly, will separate the two loan options, which should ultimately provide a lower interest rate for a fee-for-service home loan, and provide some real clarity around the real costs of a home loan.”

Currently, brokers are paid upfront commission and ongoing commission related to the business the broker brings to the bank.

“Consumers have always paid, but it’s been wrapped up in the interest rate. Post-election, they may have to pay upfront,” Mr Perks said.

Therefore, Mr Perks said any additional fees were likely to go onto the loan; a $500,000 loan may be changed to a $506,000 loan instead to cover the fee.

“This may be the last time it doesn’t cost the consumer anything for a mortgage, and the only two things that can happen is the costs of a mortgage go up, or they go down,” he said.

“Either way, by seeing a mortgage broker, you can’t lose; if fee-for-service drives costs down, then home owners and home buyers can take that option after the election, but if the costs go up, the option of lender-paid home loans may not exist,” he said.

“If the competition between lenders who use brokers as their distribution point were to cease, it seems interest rates will inevitably rise, only hurting the consumer.”

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