The final report from the Hayne Royal Commission into the finance sector was released yesterday (4/02/2019). With so many articles, opinions, and general comments flying around it has become clear that there are changes coming to the mortgage industry. The concerns around remuneration and how brokers and internal lending staff are paid is high on the list of changes.
When starting out in mortgage broking over 20 years ago, the lender’s commission was often promoted to brokers, by lenders, as a marketing cost. Lenders have an expense that is allocated to acquire new business. Staffing costs, office space, bank branches, marketing and all the other expenses associated with acquiring and servicing new home loan business included.
Lending changes, compliance changes and many other factors have increased the overall cost of lending. Smaller lenders often do not have the same exposure as major banks with branch networks and deep digital marketing pockets to hunt for new business. They have become reliant on Brokers submitting new business to them when Brokers and clients are provided with competitive products and great service.
The broking industry has introduced many more lenders to prospective buyers. This has provided a lot more choice for borrowers, especially those who do not fit the standard credit criteria.
Consider asking yourself the following questions: if banks and lenders no longer need to pay brokers a commission for marketing and acquiring business for them, then will this impact smaller lenders? Will these changes make things harder for borrowers to find better options with possibly better service?
No matter what changes occur, moving forward it is important that the industry is fair for brokers as well as lenders and will still provide the same level of choice to borrowers.
It should all be on a level playing field with the same rules and regulations. Also we hope the changes are still fair to smaller lenders, who at times offer better service and better products. If it is all fair and even across the board then, we see these changes as a good thing for the mortgage industry.
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