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.