Peter Overton, Nine News Sydney: It’s shaping up as the most controversial of the Royal Commission’s recommendations… scrapping bank-paid commissions to mortgage brokers.
But brokers are hitting back to save their livelihoods and warning it will cost consumers more.
Ross Greenwood: 76 recommendations from the Royal Commission but one in particular has set off a storm.
Ad: What would a world without mortgage brokers look like?
Greenwood: 17,000 mortgage brokers, who write half of the countries home loans, have united to express their anger at that recommendation
Ad: Without mortgage brokers you could pay more while the banks profit.
Greenwood: Say you borrow $800,000 through a mortgage broker, well the bank or lender would pay the broker $5000 upfront plus another $1,250 each year.
But if these rule changes came in, it would be you who has to pay the broker.
Some mortgage customers clearly struggle to get a loan when they dig through the banks by themselves.
Yet somehow, brokers can find them a loan. That’s what landscaper Steve Pedvin found.
Steve Pedvin, landscaper: We’ve never missed a payment, we’ve never missed a credit card payment for the last 10 years – but to the banks they just didn’t want to see us.
Greenwood: But Kenneth Hayne in the Royal Commission Final Report notes “Commissions…influence the choice of mortgage, and the amount borrowed.”
And they “drive poor customer outcomes”.
Even Commonwealth bank boss Matt Comyn, which still owns one of the biggest brokers Aussie Home Loans, thinks this system should change.
Matt Comyn, CBA CEO: My views happen to align with the Commission’s recommendations.
Greenwood: In other words, mortgage brokers should be paid by the client and not by the bank.
Comyn: Yes, that’s right.
Greenwood: But brokers and a recent Productivity Commission report say the opposite.
Mike Felton, Mortgage and Finance Association of Australia: That would simply hand power back to the majors and make it more expensive and harder to get a home laon.
Greenwood: But if customers eventually pay brokers the fees, not the bank, what will banks do with the savings?
Felton: The keep the money and it goes to shareholders.
Greenwood: Ross Greenwood, Nine News