According to the industry body, the Mortgage and Finance Association of Australia, in 2015 the total new home lending attributed to mortgage brokers was $165 billion, a 52% market share.
The Choice group put out a scathing report on the mortgage broking industry and highlighted some hard facts for consumers. Firstly, mortgage brokers do not select from the entire market, rather they pick from a limited list. Secondly, mortgage brokers have no obligations to find the consumer the best loan or even a suitable loan. Thirdly, mortgage brokers may be linked or even owned by the banks on their list. Aussie Home Loans for example is owned by the Commonwealth Bank.
Approximately 5% of practices currently provide finance broking services to their client base. In a lot of cases these are small sole practitioner practices who provide finance broking services to supplement their accounting/tax revenue. These are often ‘stuck-in-the-middle’ practices that have no strategy and provide a multitude of services trying to make a living. A sole practice in Footscray, VIC for example, often provides legal, settlement services, migration services, accounting, book-keeping, tax, and finance broking. All these services are provided by the one principal with no staff.
The pros and cons of practices providing finance broking services are basically the same as for financial planning. The main difference is the education requirements and training required for finance broking is a lot less than for financial planning.