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Any drastic change to mortgage broking remuneration economics in the wake of Commissioner Kenneth Hayne’s now fast-becoming notorious final report will put the home loan market back 30 years, one market expert has said.
Finsure Group managing director John Kolenda called Commissioner Hayne’s recommendation to remove trail commissions for mortgage brokers “misguided”, and said as a consequence that consumers might find themselves paying significantly more for a home loan.
He said that the mortgage lending landscape had already become “highly complicated and confusing” since the commission, with lending restrictions and forensic scrutiny of borrower expenses dramatically reducing borrowing power for consumers.
“We have seen a dramatic reduction in borrowing capacity for consumers, with many being disheartened by the scrutiny of the major banks in analysing their expenses,” Mr Kolenda said.
“The average consumer qualifies to borrow 20 per cent less now than six months ago and the criteria [vary] drastically across the lending landscape. The biggest hit are the SMEs, who are finding it extremely difficult to borrow any money and are reverting to paying much higher rates from private lenders in order to survive.”
Mr Kolenda said that the Hayne recommendations are “perplexing” — especially since they come without input from the broking sector.
“Brokers have revolutionised Australia’s home finance sector over the past three decades, with almost 60 per cent of home loans now processed through brokers.
“If Commissioner Hayne had bothered to ask, he would have heard that brokers have been pivotal in driving competition and transferring the power away from the major banks towards the smaller banks, regional banks and non-bank lenders, providing more options for consumers.”
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