Australia’s leading mortgage broker, Aussie Home Loans, said any changes to broker remuneration structures need to be carefully considered to ensure customers are not adversely impacted.
Aussie CEO, James Symond said the recommendation made by the Royal Commission to move to a consumer pays broker model could hurt the mortgage broking industry as well as the customers it supports.
He said “Mortgage brokers provide a very important service to borrowers across Australia. Data shows that customers value the service that a mortgage broker provides, with this industry now accounting for almost 60 per cent of all home loans written.
“Independent research shows 58 per cent of consumers will not be prepared to pay an upfront fee for a home loan, so any move to change the current system could cause significant negative repercussions for the industry and Australian borrowers.
“Consumer protection and competitive neutrality must be key to any reforms introduced. It is important to note that 66 per cent of the loans provided by Aussie in 2018 were with lenders outside of the big four banks,” he added.
Mr Symond said he welcomed the Federal Government’s recognition of the critical role brokers play and encourages all sides of politics to constructively engage with the mortgage broking industry and borrowers to understand the valuable and vital role brokers play in the Australian lending market.
He added, “Across Australia, Aussie has 1,000 mortgage brokers and 225 retail stores operating small businesses in hundreds of local communities. They help tens of thousands of customers every year. Consumers, small business owners, their employees and families, smaller lenders and others have the potential to be negatively impacted by the proposed reforms.
“It is imperative we protect consumers and competition in the market. Reduced competition in the lending market, tightened access to credit, less choice, higher interest rates are expected to be the outcomes for consumers, who will find it harder and more expensive to secure a home,” concluded Mr Symond.