Brokers Looking Toward The Future – Part 3

Unemployment is certainly a statistic that prudent Mortgage brokers should keep an eye on during the coming year and beyond. The base rate drops have made funding cheaper to businesses which might mean that businesses need to lose fewer staff to keep their doors open. This is a scenario that mortgage brokers should be praying for.

While the local property market can provide some insight into the future for the mortgage broking industry it is also worth gauging the profession in other parts of the world to see if there are any trends emerging that could happen in the UK as well.

Mortgage Advisers in Australia

Much like the UK, the land Down Under has experienced substantial growth in the independent mortgage advice industry. Unlike the UK, however, the typical Australian broking model focuses on franchising. Thousands of people work as independent mortgage brokers in Australia under a franchisor and it has mostly been a successful business model.

Mortgage advisers working under this arrangement specialise in helping their customers arrange home loans with non-bank lenders. These lenders include Aussie Home Loans, RAMS, and GE Money. Lending from non-bank lenders in Australia experienced a boom over the past decade and some analysts estimate that they closed around forty percent of all home loans issues. Second tier lenders often sell specialist products aimed at borrowers with adverse credit files or who are self-employed.

Somehow, Australia has avoided the worst of the credit crunch, unlike much of the western world, however there has been some instability. Some mortgage brokers have struggled and the franchise model has shown signs of weakness. Franchisors often have strict rules with regards to how their subordinates may operate and usually allow their franchisees to only work in certain geographical locations in order to avoid cannibalisation.

However many Mortgage brokers have complained that they need to diversify their operations since the credit crunch began. Non-bank lending now comprises about five percent of all home loans approved which means that brokers need to find other income streams to supplement their declining mortgage fee income. Because of this many franchisees are looking to become independent and work directly with aggregators, who in turn deal with the non-bank lenders, and who do not have such strict rules with regards to how their advisers operate their businesses.

This has led to a need for franchisors to become more flexible. Many mortgage brokers are merging in order to create synergy and combine their efforts. It is unlikely that mortgage brokers will disappear from the market completely as many home owners like dealing with them due to the independence of their advice and the variety of products they can advise on.

By: marktc

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