Mortgage brokers have enjoyed a decade of prosperity in Australia with a booming housing construction market together with handsome trailing fees being paid to mortgage brokers by the banks and other lenders.
However the global financial crisis and the financial services revue by the Australian Senate has changed the playing field since 2009.
The GFC caused many internationally owned banks to "pull up stumps" and leave the Australian lending market and it also caused some of our local banks to be taken over by the big four banks, with Bankwest's acquisition by the Commonwealth and Westpac buying out St George as some prime examples. Secondly, the banks which remain (the BIG 4) have taken a far harsher attitude towards trails since 2009.
Where a mortgage broker was previuously paid point six of one per cent of the value of the loan as an ongoing annual trail, this percentage has now been approximately halved. Mortgage brokers are also expected to achieve difficult volumes of referrals to qualify for the reduced trail percentage.These wind changes have reduced the profit multiples a valuer will apply to a mortgage broking business when it comes up for evaluation.
Never the less, mortgage brokers are still very good businesses, with an increasingly important position in servicing Australias housing buyers and their businesses remain valuable.