Mortgage Broking Business Opportunity

I saw this and cracked up. Why on earth would I comment on a thread asking for opinions about going into an industry I know nothing about?! If you want the informed opinion of a public servant, an economist, or a flute teacher, I'm your gal. But I certainly wouldn't be commenting on the advisability or otherwise of a career I know nothing about. I can only comment from my perspective as a customer of such services.

 

Maybe, but why would banks bother building new online systems and businesses to basically undercut themselves when they can simply outsource the work for less than it costs them to write a loan in branch?

They get a new customer usuLly with at least 3 products, loan account and credit card and they didn't spend a cent on marketing. The deal arrives neatly packaged, the assessor spends 20 minutes checking the brokers work and off to an outsourced solicitors to print and send docs.

At the moment UBank are there to mop up price sensitive customers who are happy to do a fair bit of work themselves and who's details are very simple. UBank won't won't be widening their target market anytime soon, why would they put pressure on the margins nab retail currently get?

 

I don't think you can even remotely compare the commissions earned by a broker versus a financial advisor.
Financial advisors get the full years premium PLUS 20% on an insurance policy.
Get a couple who smoke, tradie husband and you have pretty much covered a brokers commission on 4 million dollar settlements.

 

I think the commissions on insurance has dropped considerably. Maybe something like 70% max now.

 

This is true.

As has been mentioned, online lenders have been around for a while now.
Yet only in the last 2 years has the number of loans written by brokers reached the 50% mark, and now slightly higher than 50%.

The trend is toward the broker channel, not direct.

 

If any of the brokers out there have a software platform that at this point in time accurately determines serviceability for investors, please let me know. I've reviewed 5 platforms that have all been in place for over a decade, are all used by large aggregators. None of them have even been remotely keeping up with the APRA changes.

Even the lenders own online calculators aren't entirely reflecting their own policies in a timely manner. Additionally entering the correct data requires a detailed understanding of the policy of the specific lender.

I don't think mortgage brokers have anything to worry about from online competition in anything but the most basic scenarios. Online lenders only work for a very small portion of the market and they are a far bigger threat to the branch networks than brokers.

Incidently, loans.com.au has been put up for sale. I recall another cheap lender that was sold, their name was Wizard. Anyone remember what that outcome for customers was? If I had a loan with Firstmac or loans.com.au I'd be very concerned about this sale.

 

He ( Kim Cannon - owner of firstmac and loans.com.au) is unlikely to sell loans.com.au or firstmac... I'm hearing he's saying that he will listen to offers, but he is really hoping to attract an equity partner who has a deposit taking licence, because after many years of trying, he has been unable to secure a banking licence. He was almost there when he owned 13% of the Rock and was about to buy another 5 or 6% and get a couple of board seats, but then My State spoiled that party by merging with The Rock.

He's a very hard guy to read. So I'll remain at least a touch suss on whether he really wants to sell... I guess if the offer is sweet enough, you never know... But he retired once and lasted about 2 minutes... doesnt like golf. Doesnt like fishing. His only loves are his wife, firstmac, red wine and Pink Floyd... Not saying it's impossible that he'd sell.. just saying that if you knew the man, you'd think twice about whether to believe he would sell....

 

I agree it's an industry ripe for disruption. All current difficulties necessitating the work of a broker are artificial - if lenders can begin to agree on a standardised set of policies and products to suit most of the market, the entire process will be much more straightforward and won't require this middleman. Of course, this opinion won't get much love here, but it is my two cents.

 

Do you want standardisation?

 

Not sure why anyone in their right mind would want less options for finance. What a lovely world it would be to not have any alternative providers to look if policy sets were the same.

'Disruption' at the expense of actual policy and product innovation - no thanks.

 

Most brokers just like the easy stuff, like the bank lending peeps.
Anything out of the ordinary and people will start calling around.

Ubank is the same:
UBank does not lend to individuals who do not receive a PAYG Salary
UBank does not lend to individuals who are self employed and pay themselves a PAYG Salary

So if your gonna be a Broker expect to hear from those people who don't fit the bank criteria.
Many of these will be husslers who want to hussle over everything and start negtioating your fees and trails as well. My NFI estimate would be about 30% of time will be spent with dead end enquries like this.


If you have none or little experience buying and selling real estate, it may not be easy either.
If you have never been self employed...good luck you gonna need it. It's a steep learning curve for most and don't forget the upfront fees and costs needed when no income is incoming. Ya probably gonna need 20-30k in the kitty.

If you are an active investor with a long term interest in financial matters and a network of people with the same mindset, you might have a chance though don't expect everyone to stop dealing with existing contacts. And expect some small refinance or purchase just to sus you out.

I also did that cert 4 out of curiousity, maybe one day I'll do some more. Wanna buy some money?