Those looking to secure a home loan to purchase the property of their dreams can still access the services of a mortgage broker free of charge.
Recommendations handed down by Commissioner Kenneth Hayne during the banking royal commission to move away from a lender-paid commission to a consumer-paid fee and for a ban on trail commissions have not yet come into effect.
But industry professionals are saying it is now more important than ever before to get behind Sunshine Coast mortgage brokers to keep their businesses and fair competition for homeowners alive. This call also comes after the Treasurer’s announcement that the removal of trail commissions on new lending will be effective from July 1, 2020.
Both the Prime Minister Scott Morrison and shadow treasurer Chris Bowen have agreed they will consult with the mortgage broking industry before any potential changes are made.
Mr Morrison told The Sydney Morning Herald that the commission’s recommendations could be absorbed “over time” as long as it was done in consultation with the industry.
“I want to see as many mortgage brokers in this country five years from now, in fact, more than there are today,” the prime minister says.
“I don’t want to see this sector wither on the vine and be strangled by regulation that would throw them out of business, but more importantly, would deny choice and competition in the banking system.”
Mortgage Choice chief executive officer Susan Mitchell says there is no right of reply to the banking royal commission’s recommendations. She adds the industry has “significant concerns about the impact on consumers and competition if the changes are implemented without industry discussion”.
“Currently, if all of the Commission’s recommendations are adopted, the banks will be given the green light to charge a multi-thousand-dollar fee to borrowers to secure a home loan product,” says Ms Mitchell.
“This will hit borrowers hard, after they’ve saved for years for a deposit totalling tens of thousands of dollars. Further, the unintended consequence of handing back power to the banks is a possible steady increase in interest rates.”
Ms Mitchell says adding more costs in the form of an upfront fee paid regardless of whether the customer goes to a broker, or directly to a lender, “cannot possibly be a good outcome for consumers”.
“Looking ahead, I hope common sense prevails and the industry and both sides of federal politics can all work towards a level playing field for lenders and brokers,” she says.
“I believe this can best be achieved through consultation with the mortgage broking industry. Australian borrowers deserve nothing less.”