An Update on the Mortgage Broking Industry



Financial 'brokers' have been around in one form or another for as long as there have been people or organisations with money to lend, and people or organisations that want to borrow that money. In some cases the regulatory environment reduced the ability of brokers to operate effectively, however the financial deregulation that has occurred over the last three decades has ensured that, in the Mortgage Broking industry particularly, there is ample opportunity for brokers to act as intermediaries between the lenders and borrowers.

The main mortgage lenders in Australia are the Banks. They have the size, funding and distribution channels that enable them to market very heavily directly to mortgage borrowers. There are also now the 'non-bank lenders' that have come into existence since financial deregulation in the 1980's. These are organisation that don't offer bank deposit accounts, but focus purely on the lending site of banking. These organisations now provide about a third of all mortgage loans. With supposedly more product focus than the originating lenders, and lower cost overheads, Mortgage Brokers propose to offer a higher level of service than the banks and non-bank lenders without impacting the overall cost of the mortgage.

A more recent entrant in the mortgage loan market (as well as other markets such as health, car and home insurance), are the 'comparison' operators. These businesses have become prominent in the last decade as the rise of the internet has enabled consumers to shop and research all manner of products and services from the comfort of their homes.

Mortgage Comparison websites do exactly what the name suggests, they compare the mortgage products offered by both the banks, and non-bank lenders, so that borrowers can more easily find the cheapest offer, or the offer with the product features they are looking for. These sites sometimes offer value for money, particularly the more educated buyer who knows exactly what they are looking for.

Unlike mortgage brokers, who generally seek to add value by offering personalised advice on a face-to-face basis, mortgage comparison businesses tend to operate in a 'virtual' world where a phone conversation is probably as much as an individual can expect in terms of live interactions.

In all cases, anyone offering mortgage advice, or anyone who wants to know how to become a mortgage broker, needs to be a licensed advisor, or at least, have completed the relevant mortgage broker course or equivalent mortgage broker training. If you want to work in this industry check out the mandatory training requirements. If you are getting advice it's well worth asking to see what qualifications your advisor has.

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