Mortgage brokers plead their case

Australia’s fastest growing mortgage broking group has hit out at major banks, arguing that attempts to reduce commissions payable to brokers will not quell demand for their services.

Loan Market and X Inc Finance chief executive Jennifer Neilson said banks often fail to fully appreciate the level of service quality mortgage brokers provide.

“Banks seem to be in one of two camps on this issue. There are those which value both their customers and good mortgage brokers while, on the other hand, there are banks which don’t really understand too much about a broker beyond the commission cost.”

Nielson said her group was discussing the issue of commissions with all of its lenders and reinforcing to them the value of building strong, long-term relationships with borrowers.

“Our initial talks with lenders have been encouraging, with many expressing a keen interest in improving the quality of their relationships with borrowers and the business opportunities available for both the lender and their mortgage brokers.”

Neilson said the average Loan Market and X Inc Finance customer has a mortgage of about $330,000, compared with the average bank customer’s $200,000.

She said it is often easier for both banks and customers to use mortgage brokers.

“Obviously we believe it is far more efficient and cost-effective for a bank to have a mortgage broker to manage the customer, while at the same time it is also less confusing for the customer.

“With the myriad loans, options and lenders in the market, time-poor customers are increasingly turning to mortgage brokers as a source of credible independent advice.”