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 review by the Australian Senate (2009) and the subsequent Financial Services Royal Commission (2017) have changed the playing field.
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 toward trailing commissions since 2009.
Where a mortgage broker was previously paid point six of one percent 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 changes have reduced the profit multiples a valuer will apply to a mortgage broking business when it comes up for evaluation.
Nevertheless, mortgage brokers are still very good businesses, with an increasingly important position in servicing Australias housing buyers and their businesses remain valuable.
Rent roll valuations are one of the most common valuations done by Business Valuer Network members. We value many real estate practices each year and have a broad database of