The Royal Commission's recommendations in relation to the mortgage brokering industry has been released. This article will shed light on what the recommendations mean, how it could impact you, and the benefits of using a mortgage broker.
How may the Royal Commission recommendations impact you?
This is a major change and a threat to competition in the home loan market. Mortgage brokering as an industry has delivered important benefits to all Australians. Today, mortgage brokers are responsible for arranging almost 6 out of every 10 home loans. For over two decades, we’ve helped drive competition in the home loan market, giving home buyers greater choice and driving home loan interest rates down.
If the proposed changes were to become law, many consumers may not be able to afford the services of a mortgage broker and the mortgage broker industry could struggle to survive. Without brokers, more power will go to the big banks and Australians will have less access to smaller lenders, less access to credit, and reduced competition mean that interest rates are likely to rise.
What does the Royal Commission report say?
At present, lenders pay mortgage brokers a commission, which enables us to provide our home loan service at no cost to our customers. The Royal Commission's final report recommends gradually banning commissions and moving to a system where home loan customers will need to pay brokers a fee for the service we offer.
What are some of the benefits of using a Mortgage Broker?
You may not realise it, but getting a mortgage can be tricky business.
A mortgage broker is like a trusted adviser who can liaise with lenders on your behalf to get you a home loan. Brokers have access to a variety of different lenders and loans and will help you choose a product that best suits your unique financial situation. Unlike a mortgage broker, your current lender only has access to their own products meaning they bring a limited amount of choice to the table.
Local Home Loan Expert
Furthermore, when dealing with a bank you are likely to just be a number. Meanwhile, an established mortgage broker is a small business owner who has built up their customer database and reputation over many years. They are your local area home loan experts. They understand the market you are trying to buy in, because they live and work in the same location as you.
Better yet, given that they deal with many different types of customers on a daily basis, you can bet your bottom dollar that they have seen every loan scenario there is and are well positioned to help you achieve your property and financial goals - whatever they may be.
The Right Advice
Your local broker will take the time to get to know you and assess your situation by analysing your financial habits, income, previous and current debt. This will allow them to determine your borrowing power and serviceability. In addition, it will help them organise the right home loan for your needs and give you the right advice.
Most importantly, a mortgage broker will be able to answer any questions you may have, give you tailored advice to help you achieve your goals and provide alternate options that you may not have considered.
SO……What can you do to support your local Mortgage Broker?
The Broker industry needs your help to ensure the policy makers understand the potential impact of the changes on borrowers.
If you’re looking to fight for competition and choice, now is the time to act. You can make a difference by signing the industry’s online petition “Broker Behind You”.
If you’d like to take further action and have a voice, you can contact your local Member of Parliament here.
Sign the petition