Newspaper article The Chronicle (Toowoomba, Australia)

Brokers Calling for Federal Intervention

Newspaper article The Chronicle (Toowoomba, Australia)

Brokers Calling for Federal Intervention

Article excerpt

MORTGAGE Choice chief executive officer, Susan Mitchell, is calling upon the Federal Treasurer to initiate consultation with the mortgage broking industry, regarding the recommendations in Commissioner Hayne's final report, before any reforms to remuneration are made.

Ms Mitchell said the broking industry has just had its entire world changed without any consultation.

"There is no right of reply to the Banking Royal Commission's recommendations and the industry has significant concerns about the impact on consumers and competition if the changes are implemented without industry discussion.

In his final report, Hayne recommended the borrower, not the lender, should pay mortgage brokers a fee for acting in connection with home lending.

The Commissioner also recommended that a Treasury-led working group should be established to determine what fee that lenders should be required to charge to achieve a level playing field.

"Currently, if all of the Commission's recommendations are adopted, the banks will be given the green light to charge a multi-thousand dollar fee to borrowers to secure a home loan product. This will hit borrowers hard, after they've saved for years for a deposit totalling tens of thousands of dollars.

"Further, the unintended consequence of handing back power to the banks is a possible steady increase in interest rates," said Ms Mitchell.

Highlighting the plight of Mortgage Choice customers, Ms Mitchell said it's tough enough as it is for Australians to afford a home.

"Adding more costs in the form of an upfront fee paid regardless of whether the customer goes to a broker, or directly to a lender, cannot possibly be a good outcome for consumers.

"Fees could also prove to be a disincentive for refinancing and switching to a better financial product if the interest savings don't offset the switching costs. …

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