The Final Report of the Royal Commission on Bankruptcy, Superannuation and Financial Services was released last night, after which Federal Treasurer Josh Frydenberg announced the government's intention to give following 76 recommendations made by Commissioner Kenneth Hayne.
In this context, mortgage brokers will lose their trailing commissions and move to a consumer / payer business model.
Ken Morrison, General Manager of the Property Council, said that "restoring trust, improving consumer outcomes, maintaining credit flow and promoting competition" are key results of this historic final report – but warned that these changes should be "carefully managed".
One of the key recommendations to influence the finance and real estate industry was mortgage broker commissions. Effective July 1, 2020, trailing commissions will be prohibited on all new loans. Over a period of 2 to 3 years, all other commissions will be eliminated, with mortgage brokers switching to a consumer / payer model in which borrowers pay the bill.
"The abolition of errands on the trails and the proposed passage to a future" borrower / payer "model will have to be managed very carefully, so as to achieve the objective of better results for consumers without making the work of qualified brokers more difficult. borrowers to find and obtain competitive financing for real estate purchases, "he said.
Mortgage brokers currently being responsible for nearly 60% of housing loans in Australia, this decision was exactly what [the banks] wanted, "said Brendan Dixon, founder and CEO of Pure Finance.
"Once in force, the prohibition of mortgage broker commissions will inevitably strengthen the profits and position of the big banks and significantly reduce the competition of lenders – exactly what they wanted," he declared.
"On top of that, how can low-income Australians afford to pay fees to a mortgage broker for a cheaper contract? They will not do it, but the rich will want it – if there are brokers left. "
Meanwhile, Peter Koulizos, president of Professionals of Australia (PIPA), said that he hoped the release of the report would put an end to the excessive credit restrictions that had been in place for more than three years and that were starting to have a negative impact. impact on the national economy.
"Strong borrowers, who should not have any trouble getting funds under normal credit conditions, get knocked down for silly reasons, such as spending $ 50 on Uber Eats on a Friday night," he said. -he declares.
"As real estate prices continue to fall in our two largest capitals, inflation is stubbornly low, and wages are flat, lenders must release their credit so that our economy can recover. "
This sentiment was echoed by Michael Yardney, founder of Metropole Property Strategists, who suggested that "the good news was that there was no recommendation to further tighten the Bank's lending criteria. , which could have aggravated the current real estate slowdown.
"In my mind, mortgage brokers provide an important service to borrowers, homeowners and real estate investors, helping them to choose the most suitable loan amidst a maze of options," he said. Yardney said.
"At present, the government has not adopted the report's proposal to ban brokerage commissions for initial commissions … However, the Labor Party has indicated that it supports the Hayne reforms. It will be interesting to see how all this will happen, but it may mean that mortgage brokers will have to start charging upfront fees to their customers, "added Yardney.
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