Despite 80 per cent of the Australian home loan market being held by the big four banks, almost three in four people believe a major bank would not provide the best service for customers facing a crisis.
The nationwide survey, conducted for non-bank lender State Custodians Home Loans asked 1,005 respondents who they think would provide the best service when seeking out or re-negotiating a home mortgage or investment loan if they were faced with a life-changing event such as unemployment, a business fail, divorce, serious illness or a death in the family which would drastically change their financial circumstances.
The majority of Australians (72 per cent) believe in these circumstances a big bank is not their best option for service.
Given that trying to navigate through these difficult challenges can cause confusion, many people are divided on who would most likely give them the best advice and care.
Just over one third of people (37 per cent) believe they’d receive the best level of specialised attention from a smaller lending institution such as a credit union or building society.
Some 28 per cent nominate a big bank, 25 per cent say a mortgage broker, 22 per cent nominate an accountant, lawyer or financial planner, and 10 per cent say a non-bank lender.
“Australians are currently facing increasing uncertainty on numerous fronts including a stagnant economy, job insecurity, high levels of relationship breakdowns and unhealthy lifestyles leading to chronic illness,” says State Custodians general manager Joanna Pretty.
“When you’re in crisis mode it can be very stressful and confusing trying to make any major decision.
I think trust is very important in dire situations and sometimes with larger institutions people can feel like they’re ‘just a number’.
So any organisation or people who can give you the right information and reassure that they’ll look after you is important.
“I’d advise people to shop around first, and talk to different institutions and experts such as financial advisors or accountants, to see who they’re comfortable with and how they can help.”
Women felt differently to men
The Galaxy survey also uncovered that women (32 per cent) were also more likely than men (25 per cent) to think that a big bank would provide them better service in times of great need.
However, Ms Pretty says it’s important for people to know that smaller institutions are renowned for their more personal tailored service, which can be helpful when going through a personal crisis.
“Smaller institutions tend to specialise with different products and services, and are very good at helping people who fall outside traditional parameters,” says Ms Pretty.
“They can also have more of an open mind as to what kind of deal they’d be prepared to do with a customer, as they’re used to evaluating extenuating circumstances.”
People’s preferences in gaining property advice in the wake of a crisis varied greatly depending on what life stage they were in.
Some 43 per cent of youngest adults aged 18 – 24 say they’d turn to a financial planner, accountant, or lawyer first compared to just 15 per cent of those aged 50 plus.
For young people aged 25 – 34, a majority 34 per cent would seek out a smaller lending institution. People in this category also had the highest preference for a non-bank lender at 16 per cent.
For Generation X-ers in the 35 – 49 age bracket, 34 per cent would head to a mortgage broker first and 35 per cent to a smaller lending institution.
Of those aged over 50 years, a majority 46 per cent would consult a smaller lending institution first.
Ms Pretty says if you are faced with a big personal crisis and need to source a new housing loan or re-negotiate an existing one, there are practical steps you can take which will make life much easier.
“Firstly, understanding your financial situation is key.
You need to totally be across all your essential and non-essential expenses.
Secondly, don’t rely solely on well-meaning family or friends to advise you as they’ll always colour their advice with their own personal experiences.
Finally, contact various experts – not just one – and explain your situation.
The more you talk to people, the more likely it will become clear as to who is most able to assist you.”
Subscribe & don’t miss a single episode of michael yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to michael yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.