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