Are borrowers be willing to pay mortgage brokers directly?

[Chris W]

Out of Australia - from the royal commission

Key possible business impact on mortgage brokers in Australia. Wonder if the regulators will bring this into NZ.


Banking royal commission’s bombshell report: The key recommendations

• When customers make use of a mortgage broker, they expect the broker to be acting in their best interests. But at the moment, that is not necessarily the case. Often brokers are paid fees by lenders, giving them a perverse financial incentive to work against the borrower’s interests.


Mr Hayne’s recommendations will change the law to require brokers to act in the best interests of borrowers — not lenders, or indeed themselves. Any brokers who breach that obligation will face a civil penalty.


And on top of that, brokers will be paid by the borrower, not the lender, after a transition period of two or three years.



Source: https://www.news.com.au/finance/busi...p3Xrm0n4--swLs

[Beano]

Paying the bank or mortgage is all pretty normal in NZ (commercial finance )

[donna]

It's really interesting. Borrowers know Brokers work for the lenders and the current model makes light work for the broker. With the paradigm shift the broker would have to work harder for probably less $$. Plus with the deep pockets, are the lenders really going to allow a level playing ground and compete without some sort of reward on offer for bringing them the business? There will be loopholes and it will be messy.

Keen to hear from brokers in this discussion.

cheers,

Donna

[donna]

I've done a bit of research - in the UK how mortgage brokers are remunerated is wide open - however there's more disclosure required so borrowers know exactly how the broker is paid.

Some charge a flat fixed fee - and average is £500, and the broker is likely to also earn commission from the lender too. Some just get paid by the lender, others just by the borrowers with a percentage fee i.e. 1% of the loan amount.

There appears to be more regulation and disclosure so the borrower better informed of how the broker is paid just like a Real Estate Agent.

The same goes for the US.

cheers,

Donna

[Nick G]

It would kill brokering to be honest. You'd be limited to hardcore property investors and traders.

This would be VERY ANNOYING if it came to pass. I went to a broker because every time I contacted my bank the previous person had been shunted off somewhere and I had to start again, usually with someone who had no idea how investing worked. Ugh.

[Chris W]

The view from a mortgage broker

Wellington mortgage broker Andrew Perry spells out how consumers would be hurt if Aussie banks weren't allowed to pay brokers commission



Source: https://www.interest.co.nz/opinion/9...f-aussie-banks

[Chris W]

Mortgage broker fortunes to be 'devastated' by Hayne changes


The abolition of trail commissions paid to mortgage brokers will slash the value of these businesses from about 2 ½ times recurring to 1-times gross earnings, according to people who buy and sell brokerage businesses.



Source: https://www.afr.com/business/banking...social_twitter

[Learning]

If a broker could come up with the right mortgage solution and save $X,000 from the other lenders, then I'd happily pay them a portion of that $X,000 as their fee.

My first NZ mortgage was through a broker. The next 3 or 4 after that I'd get a broker to sniff around while I try my luck negotiating with a couple lenders myself. I found I always got as good as or better negotiating direct so have since stopped using brokers.

[Nick G]

The big banks in Aus are LOVING this. It will kill al their competition.

[PC]

What's wrong with paying them?
Who has time to run around town meeting bankers?
$1000 would be cheap for saving the time & hassle.

[Nick G]

FHBs using Kiwisaver.
Most home owners.
DIY types and those who will always take the cheapest route.
95% of investors with only 1-2 properties

Would just go direct to the banks that can afford a branch in their home town.

It will kill competition. I hate this so much.

[donna]

What's wrong with paying them?
Who has time to run around town meeting bankers?
$1000 would be cheap for saving the time & hassle.

Not sure $1000 would cover it. What is the average fee (a broker takes per transaction)? I was reading it's nearer 1% of the loan value. I doubt borrowers would pay that.

cheers,

Donna

[donna]

It's more likely to open up opportunities online. Tech disruption is everywhere - home loans and loans in general are ripe for the picking. With big data etc it won't belong before there's an App that can crunch the data and allow you to select from a huge number of products, a loan that's right for you.

cheers,

Donna

FHBs using Kiwisaver.
Most home owners.
DIY types and those who will always take the cheapest route.
95% of investors with only 1-2 properties

Would just go direct to the banks that can afford a branch in their home town.

It will kill competition. I hate this so much.