There have been a number of developments since Commissioner Hayne handed down his recommendations just over a month ago, so let me fill you in.
You may recall that one of the recommendations was that in future, borrowers rather than lenders, should pay for the services of a mortgage broker.
Thankfully, both the Government and the Labor party have agreed that a borrower pays model would not be in the best interests of Australian consumers.
The Labor party’s position
On the 22nd of February, the Labor party announced that if elected, Labor would abolish trail commissions from lenders to brokers on new loans from 1 July 2020. Shadow Treasurer, Chris Bowen, announced a move to a fixed commission rate of 1.1% paid by the lender to the broker.
The Coalition’s position
On the 12th of March, the Government announced it would also not be proceeding with the other recommendation around broker remuneration for the time being. The Government said they will not proceed with abolishing trail commissions on new loans, but rather review their operation in three years time.
To learn more about what trail commissions are, click here.
Above all, I’d like to take this opportunity to thank you for signing the BrokerBehindYou petition in support of mortgage brokers. If you haven’t yet put your name to the petition, it’s not too late to get involved. So far we have had almost 80,000 people support the cause!
With the federal election looming, we don’t expect the current Federal Government to make any immediate decisions regarding the mortgage broking industry.
However, the Labor party has said that it “recognises the importance of competition in the home lending sector” and will allow lender-paid commissions to brokers to continue.
Importantly, Labor has proposed abolishing trail commissions and moving to a up-front commission rate of 1.1%.
In the meantime, the broking industry believes that the welfare of Australian home buyers is too important to leave to chance. So, we will continue to lobby and educate members of Parliament to ensure that all Australians have the advantage of choice and expert support that mortgage brokers provide.
So for now, it’s business as usual. My home loan service continues to be at no cost to you.
Interest rates are super low, the mortgage market is complex – though still very competitive, the property market offers outstanding buying opportunities, and the economy is on track for growth with the lowest unemployment seen in many years.
Talk to your local Mortgage Choice broker today about how you can make this year the year to achieve your property goals.