Some of the most concerning and highly publicised recommendations coming out of the Royal Banking Commission were those affecting the mortgage broking industry. Specifically, the banning of trailing commissions and the proposal for consumers to pay the up-front costs of a mortgage broker’s services rather than the current model, where the lending bank pays a commission to the broker.
Not surprisingly, should these reforms be adopted it is likely to have a significant and detrimental impact on the finance broking industry.
Mortgage brokers now originate about 60% percent of all mortgages in Australia, and more than half a million home buyers use a broker each year. Much of the growth in our market share has come from small and regional lenders who can now compete nationally against the Big Four, which puts downward pressure on interest rates. The industry faces potential policy changes that could make the mortgage broker channel unsustainable, drastically reducing competition, choice and access to credit in home lending, while delivering a windfall for major banks.
This is reflected in consumer behaviour. Customers continue to vote with their feet, with more than 50 percent of residential lending now originated by brokers. The consumers’ Net Promoter Score of brokers is in excess of 70, which is phenomenal, and 92 per cent of customers have reported that they are satisfied with their broker’s performance. This is a credit to the great work mortgage brokers do.
The finance broker industry is systemically important to the Australian economy, and as such, increased scrutiny is entirely appropriate. Indeed, I have no doubt that the scrutiny of the industry will be positive as the relevant data will portray an industry that helps customers and drives competition to the benefit of all consumers. Having used a finance broker for both business and personal reasons I can attest to the effectiveness and the value of using one. They are the only parties who attempt to truly understand your situation, limit the risk on both sides of the deal and ultimately reach and outcome that works in your best interests
If you wish to support the mortgage broking industry, you can sign and share the petition: There is a petition available at www.brokerbehindyou.com.au – please sign and share the petition to ensure policy makers understand the weight of support behind the channel. There is also an option to contact your Federal MP on the website to contact them with a pre written email
