North Sydney Broker's Leeanne shares her thoughts about this week's Royal Commission recommendations on mortgage broker services...
When I became a mortgage broker 22 years ago, there were two things that really mattered to me. As a former teacher, I was passionate about helping people and clear communication. Becoming a mortgage broker gave me the opportunity to do both.
Back at the start of my career, mortgage brokers were a new concept, designed to help consumers wade through the jargon and policies of individual lenders and encourage competition away from the Big Four.
Over the years, we’ve seen the impact our role has had on improving our customers' choices. Interest margins to lenders have reduced from 4% in the early 2000s to 2% today. A clear benefit to the consumer.
And a large part of why those margins reduced was down to the increased competition brought to the market by smaller banks, non-bank lenders, building societies and the like. They were all given the chance to get their products in front of customers in a low-cost way thanks to mortgage brokers.
When I started in this business, I explained to clients that it’s actually cheaper for the bank to pay us to find the customer, write the loan, provide the infrastructure - the staffing and the ongoing follow up - without any additional advertising or infrastructure costs, and the lenders receive loans, they may never have otherwise arranged.
It’s a win/win. A win for the bank, a certain win for consumer and I get paid along the way.
Monday was not a great day for our industry. The Royal Commission appears to have missed its primary target - banking misconduct - and I fear mortgage brokers and consumers will now pay the price.
The Big Four banks’ stocks have surged while broking stocks in companies including Mortgage Choice and AFG have declined by 30%.
The banks already profit from your business.
Now, they want to ask you to pay for the privilege of taking a loan with them too.
It still remains reasonable that a bank that’s going to make hundreds of thousands of dollars in profit in interest from you, should pay to receive that. You should not have to pay an additional fee on top of that.
Sixty percent of mortgages in Australia are now managed by brokers. Our industry is proud to have a very high level of client satisfaction.
Changes to our remuneration structure will inevitably change the service we’re able to offer, and see clients return to the major banks, because they have no apparent option.
In this day and age of increased scrutiny, of diverse policies within lenders and fewer branches, a mortgage broker’s role is more imperative than ever.
In my business, we have always put customers first. Helping people and clear communication remain our top priorities.
Thank you to all of our loyal clients. We’ll continue to fight for our industry – one that provides choice and service - at absolutely no cost to you.
Click below to hear 3AW's Tom Elliott explain why the Royal Commission is wrong about mortgage brokers