This week is the “biggest week” in the entire history of mortgage brokers and the industry needs to be more united than ever, according to two of the industry’s top brokers.
With just days to go before the election, there is a final push to garner support and raise awareness of the impact of certain policies that could have a significant impact on the industry.
Former Australian Broker of the Year at the Australian Mortgage Awards, and second place in MPA’s Top 100 Brokers, Mark Davis, says the message has to be very clear this week.
Principal at The Australian Lending & Investment Centre, Davis believes that since the coalition government changed its mind on commission the message has not been united enough to fight against abolishing trail.
Managing director of 1st Street Financial and former MPA number 1 broker, Jeremy Fisher, joins Davis in encouraging brokers, their clients and their families to pledge their support this week – which you can do using the links at the bottom of this article.
Fisher and Davis are urging all to vote for the political party which has confirmed support of mortgage brokers.
Tampering with remuneration
The two have been in the industry for a long time with their own established businesses, but this does not mean they are immune to the impact if trail were to be abolished, Fisher says.
“If how we are remunerated is tampered with, our ability to operate as we currently are will not be possible,” he says.
“We will see brokers exit the industry, there will be a slowdown on new brokers entering the industry, staff levels reduced considerably, and smaller lenders will suffer with deal flow - given up to 90% of their new business is derived from brokers. Not to mention behavioural issues that will arise such as churning which isn’t prominent based on the current model.”
Brokers are already finding it tough, says Davis. “With a reduction of upfronts with net of offset by 12% and average costings to process a loan increasing by 35%, brokers are currently 47% out of pocket in 12 months.
“The cancellation of trail on top of this could potentially turn this number to 67%, making it extremely hard to offer our current service models.”
Limited with choice
Fisher adds that it’s not just brokers and the smaller lenders that will suffer, most importantly, it’s the clients, the everyday home buyers they look after.
“The impact overall will be hardest felt by our customers – they will be limited with choice and many will be forced to deal direct,” he says.
“Regional Australia will also feel the pinch as access to branches in some cases could mean driving over 100kms whereas currently brokers are servicing regional Australia exceptionally well.
“Bottom line – we care about our industry and our fellow brokers and want to ensure we do our part to protect what the likes of Mark Bouris and John Symonds created over 20 years ago – choice for customers and competition for the banks.”
But it’s not just broker remuneration that’s a concern. The plans for negative gearing could be “catastrophic” for clients’ net wealth, house values and in turn loan volumes, says Davis.
“If negative gearing goes and we get the double whammy, further reductions in house values will reduce lending flows significantly making it even tougher to survive the next three to four years under our current broker models before supply issues are formed and house prices go back up,” he explains.
Fisher and Davis are encouraging brokers to send this link to all their clients: https://www.choicematters.com.au/
Brokers, clients, friends and family can also head to the following link to email their local MPs: https://www.brokerbehindyou.com.au/support-your-broker/