Australia’s peak industry body representing independent buyer’s agents is backing calls to protect competition in the home lending market.
Real Estate Buyers Agents Association of Australia (REBAA) president Rich Harvey said changes announced last week to mortgage brokers’ remuneration as part of the Banking Royal Commission could spell the death knell for the broking industry if implemented.
Mr Harvey said the flow-on effect for home buyers would be that they would be forced to spend many thousands of dollars to access a broker or else be left “at the mercy of the banks” to negotiate interest rates or select suitable loan products.
Last week the Mortgage & Finance Association of Australia (MFAA), together with a coalition of industry partners, launched their ‘Don’t Kill Competition” campaign to highlight the plight of the mortgage broking industry in the face of remuneration restrictions.
“The reality is the people who will be least able to afford to use a broker are probably the ones who need the advice the most which only serves to punish the most vulnerable,” he said.
“We need competition and access to smaller lenders to keep prices low otherwise we’re giving banks more power over customers which would not be in the best interests of home buyers and investors.”
Credit Suisse has estimated that the banks will save between $800 million and $1.6 billion per year from potential broker remuneration changes which, according to Harvey, would be a disaster for brokers and a windfall for banks.
“It’s important to remember that it’s not only consumers but millions of small businesses that rely on brokers for finding mortgages and referrals that will suffer from the broker decline,” he said.
“The knock on effects could be substantial as mortgage brokers originate over 55 per cent of mortgages. Changing the way that brokers are remunerated may eventually eliminate a key distribution channel for lenders and put a road block in front of consumers to access finance options.
“This in turn will threaten lender competition as we know it and an oligopoly could likely result, with the powerful big banks reclaiming a disproportionate share of the market.”
Mortgage brokers provide a valuable service to consumers by providing a detailed assessment of various loan options and take the time to sift through potentially thousands of loan products.
An individual bank officer or lender is unlikely to visit someone’s home or workplace and provide that level of service.
“We urge consumers and mortgage brokers alike to visit the national campaign website to register their support with their Federal MP.”
Visit https://www.brokerbehindyou.com.au to enter your postcode and contact your Federal MP.