Brokers: Wake Up or Perish!

Mortgage Brokers Need To Support Non-Bank Lenders

Apr 25, 2009 Craig Pickering

Brokers are giving their clients business to the banks, and could be hastening their own demise.

A strange anomaly has intensified over the past year, one that could see the end of brokers in our industry. And yet, it is the brokers themselves that are perpetuating this anomaly.

The success of the broker network was largely due to non-bank lenders, for example Aussie Home Loans in Australia, and brokers have enjoyed ten years of steady growth and healthy commissions. That was until last year, when everything was turned upside-down.

With non-bank lenders diminishing in number and those remaining struggling through this financial crisis, it would be natural to assume that brokers would pitch in and support those non-bank lenders remaining. After all, it can be argued that they owe them for all those good years.

This loyalty should have intensified when banks lowered (and in some cases removed) their commissions to brokers. The reason they gave was the rising cost of funds.

Surely, brokers would now rally behind the non-bank lenders!

Then the major banks introduced "quotas", "quality of applications" and "volume targets" for brokers (Australian Broker Magazine). So, here we have the major banks demanding from brokers better quality applications, and more of them, for less commission.

This is where the anomaly comes in. You see, banks now have more market share than ever (Australian Financial Review).

Brokers, who are being squeezed out of the industry by these banks and market forces, are writing more bank loans than they ever have. They are actually supporting the very institutions who have been against them from day one, and who are well on the way to eliminating them altogether.

WAKE UP!

Yes, the banks will put through deals that others will not touch. However with their new demand for quality applications this will not continue indefinitely.

Non-bank lenders may be hard to find these days, and their rates and products may not be as easy to sell as they were, but if you, the mortgage broker, value your place in this industry then you will put more business their way.

Non-Bank Lenders

Non-bank lenders still pay good commissions, including trail, provide excellent service and they completely support the broker network.

The significant loss of competition in the market has already resulted in the banks choosing what interest rate reductions to pass on, because the pressure to match the non-bank lenders is no longer a factor.

Brokers, if you value your business and your income, support the non-banks wherever possible. They have supported you for many years, and that loyalty deserves to be repaid.

Non-bank lenders will continue to pay higher commissions, and with your help they will once again provide competition for the major banks.

This competition is vital for our industry, and our clients.

It is now up to you.

The copyright of the article Brokers: Wake Up or Perish! in Mortgages/Loans is owned by Craig Pickering. Permission to republish Brokers: Wake Up or Perish! in print or online must be granted by the author in writing.

Mortgage Brokers