The Australian Mortgage Broker Survey 201110 Jun 2011 • by Natalie Aster
The mortgage broker channel has assumed an pivotal role in the distribution of residential mortgages in Australia. However, pressure on broker commissions has led to serious concern among industry participants. The report “The Australian Mortgage Broker Survey 2011” by Datamonitor looks at how the mortgage broker channel is changing and focuses on issues and challenges faced by brokers.
As consolidation occurs within the mortgage broker industry – and companies consequently become bigger – players can more easily offer a large panel of lenders. From a mortgage lender's point of view, the closer they can tie their systems to large broker companies, the easier and quicker approval processes can become.
Given the drastic commission cuts experienced in 2008, it is not surprising that broker satisfaction with commission levels fell between 2007 and 2009. In 2007, 63% of brokers were very or quite satisfied, a proportion which had fallen to 21% by 2009. Over the same period, the very or quite dissatisfied proportion rose from 13% to 46% of brokers.
When asked to name the most important area for lenders to improve, 30% of brokers mentioned loan approval and turnaround times. Since long loan approval times can cost sales – and since there are no commissions to be made from a customer whose business has been lost – keeping loan approval times low is vital to mortgage brokers.
Published: April 2011
Price: US$ 2,795
Report Sample Abstract
There are several interesting points to be gleaned. Firstly, brokers would clearly appreciate a revamp of the available commission schemes, as only 26% are happy with the current balance between upfront and trail commission. Moreover, brokers have become more polarized in recent years, with some brokers wanting a greater focus on upfront commissions and some brokers wanting a greater focus on trail commissions. This indicates that lenders should consider working to optimize the commission structures they offer. Since different brokers prefer different structures, a potential solution would be to offer a range of structures. For example, one broker might opt for a commission scheme that offers higher upfront but lower trail commissions, while another might choose an option with higher trail but lower upfront commissions. As will be shown, raising broker satisfaction has become a key issue, as satisfaction levels with the current schemes have reached a low.
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