Australian brokers are among the lowest paid in the world, according to a new global research report by the Finance Brokers Association of Australia (FBAA).

The study looked at remuneration structures in Australia, Canada, Holland, New Zealand, South Africa, the UK and the USA. It found that lenders in Australia pay brokers an average remuneration of 0.65% upfront for a home loan settlement, compared to the global average (excluding Australia) of 1.26%.

Some lenders also pay brokers an ongoing (trail) fee for the period that the home loan borrower continues to meet their mortgage repayments. In Australia, the 0.15% trail fee is 5% lower than the global average.

A conflict of interest?

Most mortgage brokers don’t charge a fee to their customers because they are paid commission by the lender once the loan settles. This means we often provide our services without any guarantee of payment.  

Does this generate a conflict of interest? Would we recommend a loan because we are paid to do so by a lender?

No, is the short answer! The long answer is that we want to keep ourselves in business, which means we operate ethically and legally. After all, mortgage brokers are holders of an Australian Credit Licence and must adhere to the protections set out in the National Credit Act 2010. These state that a broker must never recommend a product that is ‘unsuitable’ based on ‘reasonable enquiries’ of your financial situation.

We take pride in a job well done. Our intimate knowledge of our lenders’ products is one way we achieve success in matching home loans to individual client needs.

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The broad-based pick-up in the global economy is continuing. Labour markets have tightened further in many countries and forecasts for global growth have been revised up since last year. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Commodity prices are generally higher than they were a year ago, providing a boost to Australia's national income. The prices of iron ore and coal, however, have declined over recent months as expected, unwinding some of the earlier increases.

Headline inflation rates in most countries have moved higher over the past year, partly reflecting the higher commodity prices. Core inflation remains low, as do long-term bond yields. Further increases in US interest rates are expected over the year ahead and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively.

Domestically, the transition to lower levels of mining investment following the mining investment boom is almost complete. Business conditions have improved and capacity utilisation has increased. Business investment has picked up in those parts of the country not directly affected by the decline in mining investment. Year-ended GDP growth is expected to have slowed in the March quarter, reflecting the quarter-to-quarter variation in the growth figures. Looking forward, economic growth is still expected to increase gradually over the next couple of years to a little above 3 per cent.  

Indicators of the labour market remain mixed. Employment growth has been stronger over recent months, although growth in total hours worked remains weak. The various forward-looking indicators point to continued growth in employment over the period ahead. Wage growth remains low and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens. Slow growth in real wages is restraining growth in household consumption.

The outlook continues to be supported by the low level of interest rates. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Conditions in the housing market vary considerably around the country. Prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.

Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.