Three in four home loans in Australia are now arranged through mortgage brokers, as borrowers seek better deals following years of rising interest rates. Despite concerns raised by a royal commission about brokers' compensation, Australians are increasingly favouring brokers over traditional banks.
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00:00For Rose and Paul, their home provides a piece of paradise.
00:11When they were buying, Rose wasn't going to walk into a bank to sort out a loan.
00:17By going through a broker, it's more of a streamlined service.
00:20It's more personalised to your needs and they just take care of everything for you.
00:26In the three months to June in 2019, brokers wrote 55% of all new mortgages in Australia.
00:34Five years on, they're responsible for nearly 74% of new home loans, the second highest
00:39result on record.
00:41It's not actually just on helping them get the mortgage, but educating them around what's
00:46required, getting them finance ready.
00:49Banks pay brokers for bringing loans to them and most mortgages still flow back to the
00:54so-called big four.
00:57Banks have to come to the broker market to actually get their quota and to meet their
01:01fill.
01:02So if they're not dealing with brokers, there's not enough customers out there for them to
01:08survive.
01:09Brokers' share of the market keeps growing.
01:12That's despite Banking Royal Commissioner Kenneth Hayne calling out the conflict inherent
01:16in the model, where brokers are paid through upfront and trailing commissions for loans
01:21that they write.
01:23Leading some to fudge the figures to get customer loans approved.
01:27What's in it for the broker to say, oh, are you sure, is that right?
01:32Hayne recommended making customers pay an upfront fee.
01:35It got ruled out.
01:37But Rose says she doesn't worry about the commission structure her broker uses.
01:42A hundred percent, yeah, we don't mind paying her, especially the broker that we have, we
01:46trust her.
01:47It's just that peace of mind that she gives us.
01:50In the United Kingdom, brokers' share of the loan market is closer to 90 per cent.
01:56Australia catching up.