Source: The Property Insider, Quartile Research (http://www.propertyinsider.com.au)
Cheers,
Aceyducey
Reserve Bank calls for regulation of mortgage brokers
- Thread starter Aceyducey
- Start date
Cheers,
Aceyducey
Hi Ac
I agree with that we need more regs, for sure, the industry is becoming silly with the number of people that are entering looking to do a little bit of work on a part time basis.
15 000 brokers and 13 billion dollars mkaes for many hungry brokers
Ta
rolf
I agree with that we need more regs, for sure, the industry is becoming silly with the number of people that are entering looking to do a little bit of work on a part time basis.
15 000 brokers and 13 billion dollars mkaes for many hungry brokers
Ta
rolf
Rolf Latham said:
hmm.... $13 billion divided by 15,000 brokers = $866,666.66
Hey the rest of us should become brokers too!
Perhaps we could set up some kind of pyramid broking scheme...
Cheers,
Aceyducey
PS: If brokers got a 5% return on the $13billion borrowing they'd be getting under the average wage....and no-one gets a return as high as this.
Hiya AC
thats 886 k worth of gross loans written.
The average comm is .62 %, so 5369 dollars per month.
Thats 64 k gross turnover a year.
The "average" broker would spend around 4 k a year in insurances for their business and PI.
Advertising and lead generation takes up to 40 % of gross revenues for many.
The reality as it often is, I feel is that 20 % of brokers make 80 % of the money, and there are many of that 15 000 that treat it as a hobby or a sideline.
I have no figures to back that, but id suggest the industry is very much a revolving door, because it is possible to make a good dollar, in an ethical way, and for many it seems easy so easy. Like ALL commission only work.
ta
rolf
thats 886 k worth of gross loans written.
The average comm is .62 %, so 5369 dollars per month.
Thats 64 k gross turnover a year.
The "average" broker would spend around 4 k a year in insurances for their business and PI.
Advertising and lead generation takes up to 40 % of gross revenues for many.
The reality as it often is, I feel is that 20 % of brokers make 80 % of the money, and there are many of that 15 000 that treat it as a hobby or a sideline.
I have no figures to back that, but id suggest the industry is very much a revolving door, because it is possible to make a good dollar, in an ethical way, and for many it seems easy so easy. Like ALL commission only work.
ta
rolf
I've been bitten by one of this rouge MB's. Actually just to be fair I didn't do my homework and that's why I'm anti-MB's.
Essentially he presented the virtues of LC mortgages and how discipline can save you $$$ . For all of this magical advice and finding the right mortgage we paid $4K and got some paper work for it - wippee!
I forgot why I had an accountant and financial advisor - anyway in a moment of weakeness and stupidity I allowed one of these SOB's to take advantage of me!
Not again - knowledge is king
Later.... Squash
Essentially he presented the virtues of LC mortgages and how discipline can save you $$$ . For all of this magical advice and finding the right mortgage we paid $4K and got some paper work for it - wippee!
I forgot why I had an accountant and financial advisor - anyway in a moment of weakeness and stupidity I allowed one of these SOB's to take advantage of me!
Not again - knowledge is king
Later.... Squash
Hiya Squash
That werent a Mortgage Broker.
That were a Mortgage Reduction Plan, attached to the loan.
Chances are the LOC wasnt the most cost effective product either :O(
Thats why one should seek referals and if they arent available then your best guide is to use a MIAA accredited member, however this wont protect you against an incorrect product being offered.
Like many things, thats one area where I belive you cant regulate without being silly about it. It would be like, well sorry Mr Accountant, now you can only charge $ 70 an hour for your services because thats the prescribed fee. Has to be Caveat Emptor with some common sense remedies.
Capping commissions is one thing, but preventing the sale of add on products is going to be hard to implement.
Ta
Rolf
That werent a Mortgage Broker.
That were a Mortgage Reduction Plan, attached to the loan.
Chances are the LOC wasnt the most cost effective product either :O(
Thats why one should seek referals and if they arent available then your best guide is to use a MIAA accredited member, however this wont protect you against an incorrect product being offered.
Like many things, thats one area where I belive you cant regulate without being silly about it. It would be like, well sorry Mr Accountant, now you can only charge $ 70 an hour for your services because thats the prescribed fee. Has to be Caveat Emptor with some common sense remedies.
Capping commissions is one thing, but preventing the sale of add on products is going to be hard to implement.
Ta
Rolf
Spot on, the chap actually did fish around for the right mortgage which in the end we told him to bugger off due to a few differences in what a mortgage product should provide. I'm in IT so I should be able to do i-banking.
I've learnt a lot more and at the end of the day, I've learnt to be more cynical and i am married to the orginial doubting thomas - don't think those wounds are real Jesus
Later... Squash
I've learnt a lot more and at the end of the day, I've learnt to be more cynical and i am married to the orginial doubting thomas - don't think those wounds are real Jesus
Later... Squash
FWIW, ACT brokers have to be licienced through Dept of Fair Trading. Best of my kowledge, it's not policed though... should be.
Ask your investing friends who they used as a broker and their experiences. That's possibly your best safeguard.
Most of us are MIAA and licienced but really ASIC or the like should regulate us. oooooh I can hear the brokers out there saying otherwise. It's a way to get rid of the part timers, and tidy up the scene.
This is what one Brokerage firm advertises...
"Our unique structure of networked home offices is the key, allowing us to tap into areas of untapped quality in the workplace: students, It professionals in regional areas and professional women working flexible hours from home"
This reads to me like they do this as a part time job.
Now I don't have an issue with part timers except, how do they do it. I'm full time with a PA & I struggle to keep up to date with all the daily litrature to read. They have to be missing info here and there. And if that's the case then they arn't doing the job properly. You cannot be a part time broker, not if you want to do right by your clients.
I'll hop off my soap box now.
Ask your investing friends who they used as a broker and their experiences. That's possibly your best safeguard.
Most of us are MIAA and licienced but really ASIC or the like should regulate us. oooooh I can hear the brokers out there saying otherwise. It's a way to get rid of the part timers, and tidy up the scene.
This is what one Brokerage firm advertises...
"Our unique structure of networked home offices is the key, allowing us to tap into areas of untapped quality in the workplace: students, It professionals in regional areas and professional women working flexible hours from home"
This reads to me like they do this as a part time job.
Now I don't have an issue with part timers except, how do they do it. I'm full time with a PA & I struggle to keep up to date with all the daily litrature to read. They have to be missing info here and there. And if that's the case then they arn't doing the job properly. You cannot be a part time broker, not if you want to do right by your clients.
I'll hop off my soap box now.
Quote<<The Governor of the Reserve Bank of Australia, Mr Ian Macfarlane, has urged State and Federal governments to immediately introduce regulations and guidelines for the mortgage broking industry.
...There are already at least three national industry associations and each lender has it's own accreditation process, and each aggregator has it's own membership criteria, and each broker has to have Professional Indemnity Insurance, Police Checks, business and character references plus brokers are not allowed to mention debit products (banking products) ...
Mr Macfarlane made the suggestion to a Parliamentary committee saying “there is no regulation at all on mortgage brokers and yet this is an industry that has grown up and is quite big now”.
...Yes, and it's getting bigger as more customers realise that shopping around for mortgage products is in their long term best interests...
Macfarlane is reportedly most concerned with the financial incentives which are in place for brokers to sign lenders up to mortgages that they actually may not be able to afford.
...How can this be, when all a broker does is introduce the customer to the lender?...
“(Mortgage) brokers are very keen to lend something to you and it doesn’t really matter what happens to that loan after they have lent it to you because they have got their commission”, Mr Macfarlane said.
...I don't know of any brokers who will lend you anything. The broker is just an intermediary and does not make any lending decisions at all. What a pity that brokers get paid. It's obvious that they really shouldn't, same as estate agents shouldn't get paid, neither should any one who acts as an agent, such as a stock & station agent etc. Why don't they get a real job?...
According to a recent survey by Market Intelligence Strategy Centre (MISC), brokers sourced more than $13 billion worth of home loans during the December 2003 quarter, a 26% increase on the business they generated in the previous year.
As Australians become more prepared to look out for their own best interests and less likely to be blindly loyal to their bank, the broker-sourced loans will continue to overtake market share from the more passive lenders who think that brand name will be enough.
There will always be greater and lesser degrees of competance, and it takes time for people to build up experience. A heavily promoted brand name or franchise group does not guarantee the customer of the skill of the broker or lending officer.
In Victoria, there used to be a licensing system, but this was scrapped when all the 'extraneous' licenses (such as driving instructors) were abolished.
Personally, I think there should be a licensing system with a minimum level of education, such as with the Course for Estate Agent's Representatives applies for Estate Agents. I have done Certificate III in Mortgage Lending, which cost me over $700 and quite a bit of midnight oil. I would be more than happy to be 'licensed' with the State or ASIC as well as 'accredited' with the Lenders.
The aggregator I am with has a fantastic software program, but there are 1,200 loans in the system for Victoria alone. How can one person hope to be familiar with 1,200 loan products? Software helps, but it can't do the job. The broker still has to have lots of smarts or else they will end up only offering the products of one or two lenders so really they may as well be a Bank X Mobile Mortgage Lender which is not acting as a 'Broker' at all.
Having been in sales for most of my life, one of the aspects of broking which I particularly enjoy is that I come second in the transaction. I cannot offer anyone a mortgage loan. The customer must have made the decision to buy or to refinance before I come on the scene. My role is therefore to support them in that decision and to find practical ways ie the appropriate type of finance and the appropriate lender of that type to suit the customer's purposes. It is largely a process of education and if I have done a good job for the customer then, and only then, do I get paid.
I appreciate that the article attributes comments to Mr MacFarlane and these comments may not have been accurately reported.
If they were, it is a pity that a person in a position of such influence should exhibit such limited understanding of the role and limitations of the actions of a broker in the modern financial climate.
Oh well, back to slaving over a hot laptop. Now, which lender will be best for the customer I interviewed this afternoon? BankWest? HSBC? mmmm what about ING? Where did I put that 78 page Lenders Manual? And what about no minimum redraw and a Honeymoon rate, hang about, he's buying in a Company name, so perhaps ......
(sigh)
Kristine
...There are already at least three national industry associations and each lender has it's own accreditation process, and each aggregator has it's own membership criteria, and each broker has to have Professional Indemnity Insurance, Police Checks, business and character references plus brokers are not allowed to mention debit products (banking products) ...
Mr Macfarlane made the suggestion to a Parliamentary committee saying “there is no regulation at all on mortgage brokers and yet this is an industry that has grown up and is quite big now”.
...Yes, and it's getting bigger as more customers realise that shopping around for mortgage products is in their long term best interests...
Macfarlane is reportedly most concerned with the financial incentives which are in place for brokers to sign lenders up to mortgages that they actually may not be able to afford.
...How can this be, when all a broker does is introduce the customer to the lender?...
“(Mortgage) brokers are very keen to lend something to you and it doesn’t really matter what happens to that loan after they have lent it to you because they have got their commission”, Mr Macfarlane said.
...I don't know of any brokers who will lend you anything. The broker is just an intermediary and does not make any lending decisions at all. What a pity that brokers get paid. It's obvious that they really shouldn't, same as estate agents shouldn't get paid, neither should any one who acts as an agent, such as a stock & station agent etc. Why don't they get a real job?...
According to a recent survey by Market Intelligence Strategy Centre (MISC), brokers sourced more than $13 billion worth of home loans during the December 2003 quarter, a 26% increase on the business they generated in the previous year.
As Australians become more prepared to look out for their own best interests and less likely to be blindly loyal to their bank, the broker-sourced loans will continue to overtake market share from the more passive lenders who think that brand name will be enough.
There will always be greater and lesser degrees of competance, and it takes time for people to build up experience. A heavily promoted brand name or franchise group does not guarantee the customer of the skill of the broker or lending officer.
In Victoria, there used to be a licensing system, but this was scrapped when all the 'extraneous' licenses (such as driving instructors) were abolished.
Personally, I think there should be a licensing system with a minimum level of education, such as with the Course for Estate Agent's Representatives applies for Estate Agents. I have done Certificate III in Mortgage Lending, which cost me over $700 and quite a bit of midnight oil. I would be more than happy to be 'licensed' with the State or ASIC as well as 'accredited' with the Lenders.
The aggregator I am with has a fantastic software program, but there are 1,200 loans in the system for Victoria alone. How can one person hope to be familiar with 1,200 loan products? Software helps, but it can't do the job. The broker still has to have lots of smarts or else they will end up only offering the products of one or two lenders so really they may as well be a Bank X Mobile Mortgage Lender which is not acting as a 'Broker' at all.
Having been in sales for most of my life, one of the aspects of broking which I particularly enjoy is that I come second in the transaction. I cannot offer anyone a mortgage loan. The customer must have made the decision to buy or to refinance before I come on the scene. My role is therefore to support them in that decision and to find practical ways ie the appropriate type of finance and the appropriate lender of that type to suit the customer's purposes. It is largely a process of education and if I have done a good job for the customer then, and only then, do I get paid.
I appreciate that the article attributes comments to Mr MacFarlane and these comments may not have been accurately reported.
If they were, it is a pity that a person in a position of such influence should exhibit such limited understanding of the role and limitations of the actions of a broker in the modern financial climate.
Oh well, back to slaving over a hot laptop. Now, which lender will be best for the customer I interviewed this afternoon? BankWest? HSBC? mmmm what about ING? Where did I put that 78 page Lenders Manual? And what about no minimum redraw and a Honeymoon rate, hang about, he's buying in a Company name, so perhaps ......
(sigh)
Kristine
squash said:
Unlike many, I had a good experience in this arena. One of these guys selling their Mortgage Reduction Plan was what started me off on my investing journey, so I don't hold any grudges, but then again I didn't part with any money.
I was just looking to pay off my PPOR as quickly as possible and he suggested that with all the money I would save I could buy an investment property. This thought hadn't crossed my mind before. So I listened carefully, took notes, reveiwed everything and came to the conclusion that I could source the same kind of loans without his exorbitant fees and went and bought the first IP. Haven't looked back since.
Cheers
I should have added, that prior to having my dinner interrupted with an unsolicited call, you know the one, “do you currently have a mortgage, do you want to save $$$ and years off it?” - bla, bla, bla I actually had a well thought out Mortgage Reduction strategy, devised by my accountant and advisor.
I guess it was the right time, right place for them as I was in the process of shopping around to refinance... a moment of weakness I guess or maybe just plan laziness.. their hook into shopping for mortgage for you was their Mortgage Reduction Plan, something which they’d review quarterly – baahaa, bullsh!t
Serves me right, painful lesson but one that I will remember always – the old clichés still ring true ‘a fool and his money are soon parted’
I guess it was the right time, right place for them as I was in the process of shopping around to refinance... a moment of weakness I guess or maybe just plan laziness.. their hook into shopping for mortgage for you was their Mortgage Reduction Plan, something which they’d review quarterly – baahaa, bullsh!t
Serves me right, painful lesson but one that I will remember always – the old clichés still ring true ‘a fool and his money are soon parted’
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