About one in three mortgage broking customers don’t understand how the broker gets paid.

But the split between borrowers using a mortgage broker or going direct to a lender to select a home loan remains almost even, findings in the new “Customers Experiences of Using Mortgage Brokers” report shows.

One in three mortgage broking customers are unclear how commissions are paid. Picture: SuppliedSource:istock

The report released by Deloitte and commissioned by the Mortgage Finance Association of Australia shows about 70 per cent of mortgage broking customers said they were aware of how their broker was paid, but the remaining third did not.

Fifteen per cent said they were unsure and another 15 per cent said they did not receive any explanation at all about commissions.

MFAA’s spokesman Stephen Hale said the results were “of concern” and work needed to be done to improve this so all mortgage broking customers clearly understood the remuneration process.

“It’s imperative that brokers explain that (commissions),’’ he said.

“Are there people who do it properly, not the whole industry, and that is a concern and something we need to get better at.”

The Australian Securities and Investments Commission is in the final stages of its review into the remuneration of mortgage brokers and its expected the report findings and recommendations will be delivered by Financial Services Minister Kelly O’Dwyer by the end of the year.

Financial Services Minister Kelly O'Dwyer is expected to hand down the findings of the review into the remuneration of mortgage brokers by the end of the year. Picture: SuppliedSource:AAP

Brokers receive commissions from the lender and the amount they receive depends on the loan size — commissions do vary across lenders.

The report found of all home loan customers, 47 per cent used a broker while 53 per cent went direct to a lender.

The report also found a majority of both types of customers believed the broker or lender acted in their best interest.

But 40 per cent of broking customers believed brokers acted in their best interests at all times compared to 22 per cent of all customers who went straight to a financial institution.

Customers deemed the interest rate as the most important factor when selecting a home loan, followed by product features, understanding mortgage documents, getting support and getting independent advice.

sophie.elsworth@news.com.au