In a year when just about every real estate record was broken, home buyers turned to mortgage brokers in droves.
More than two-thirds – a record 66.9 per cent – of residential mortgages were written by brokers in 2021.1 That’s a leap of 6.8 per cent on the year before and continues an astonishing climb from 2016, when the industry represented 50 per cent of the market.
You don’t see that sort of rise unless you’re doing something right. So, let’s consider what brokers have brought to the table.
Trust: you’re a legal priority
It’s no coincidence that the biggest year for broking kicked off with the introduction of new consumer laws to make mortgage broking the gold standard in lending. Known as Best Interests Duty, the new laws took effect from January 1, 2021,2 and mean we’re now proudly held to a higher standard than branch lenders. Brokers have a legal obligation to show we have acted in our clients’ best interests at every point of the lending journey. This means taking the time to understand your financial situation and priorities as well as making sure you understand your lending choices. It’s been a win-win for consumers and brokers.
When he launched the model T, Henry Ford famously said buyers could have any colour as long as it was black. It can be a similar story going to a single lender – any loan as long as it’s theirs. Mortgage brokers have always aimed to deliver real choice, with products from a broad range of lenders spanning traditional banks to the newer non-bank and niche lenders. This fuels competition and expands options by helping smaller lenders reach more consumers, particularly those in rural and regional areas.
Everyone wants a greater choice, but sometimes it can be overwhelming. Should you go fixed, variable, or split? And what about add-on features – do you need an offset account, flexible repayments or a redraw facility? One of the most important things I can deliver is simplicity. You can’t be expected to be across the mortgage market, but I can. It’s the core of my job to understand your priorities, understand the market and help arrange a happy marriage between both. I’ll do the legwork, but also make sure you understand your options.
Fighting your corner
We work for borrowers, not lenders. And that means advocating for you at every stage. Our experience helping other clients also means we’re aware of any unadvertised/discretionary deals and discounts lenders have offered previously, so we have a good understanding of just how flexible (or not) they can be.
Broker fees are usually paid on a commission basis by lenders, rather than borrowers, with very little difference in commission rates between lenders. We are required to be absolutely upfront with you about what we will earn from the different loan options available to you. Best Interests legislation introduced last year means brokers have a legal duty to ensure our recommendations are based on the best possible deal for consumers, without consideration of/for commission payments.
Keeping them honest
Mortgage brokers help drive interest-rate competition, with a Deloitte report noting the net interest margin big banks earned on residential loans fell an average of three per cent in the decades after the industry established in Australia.3 This downward pressure on profit margins continues to deliver maximum value to consumers.
If we’ve learned one thing in the past two years, it’s where the mute button is on Zoom. Convenience is now about more than just flexible appointment times, it’s about flexible appointment options: phone, online or in person. Get in touch to arrange what works for you.
It’s not a one-off
Finding a home loan through a broker is about building a relationship, not making a deal.
We’re in it for the long haul. That means running an annual health check on your mortgage to make sure it still works for you at every stage of your life, whether it’s paying down principal, refinancing, renovating or looking towards retirement. The better we get to know you, the better we can help.
1 More than two in three home loans written by mortgage brokers, Mortgage and Finance Association of Australia, November 29, 2021.
2 Mortgage Brokers: Best Interests Duty, Regulatory Guide 273, Australian Securities and Investments Commission.
3 O’Mahony, J., The Value of Mortgage Broking: Assessing the industry’s role in the economy, Deloitte Access Economics, 2017.