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Mortgage Brokers in Australia – Industry Market Research Report

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Product Description
This Industry Market Research report from IBISWorld provides a detailed analysis of the Mortgage Brokers in Australia industry, including key growth trends, statistics, forecasts, the competitive environment including market shares and the key issues facing the industry.

Industry Definition

Mortgage brokers in Australia generally act on behalf of lenders, aiding borrowers in sourcing and applying for mortgage finance for both residential and inv… More >>

Mortgage Brokers in Australia – Industry Market Research Report

Mortgage Broker the Way to Go in Australia

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If you are in the market for a home loan then your best course of action is to obtain assistance from an experienced mortgage broker who is also accredited with the national industry body, the Mortgage Finance Association of Australia (MFAA). By dealing with a mortgage broker who is a member of the MFAA you are not only assured of the knowledge, experience and training of the mortgage broker but you also have access to a free and independent dispute resolution process should, for any reason, the mortgage broker or the lender with whom you eventually take out a mortgage loan, not comply with the Association’s stringent code of conduct.

While the level of complaints against mortgage brokers in Australia is very small when compared to the number of borrowers who utilise their services, it is nevertheless a wise decision to work with a mortgage broker who is a MFAA member. A quick, independent and free dispute resolution process is provided by Credit Services Ombudsman Limited (COSL) which is one of the few ASIC –approved dispute resolution entities in the mortgage broker / finance area. Should you have a complaint about your mortgage broker or lender then there is comfort in knowing that it will be handled without the need for lengthy and expensive court proceedings. If for any reason you are dissatisfied with the outcome you, as a borrower still have access to courts if you wish to pursue the mortgage broker or lender. The member mortgage broker or lender, on the other hand is bound by the decision of the Ombudsman.

Seeking the services of a mortgage broker will inevitable save you time and money. If you are working full time or not particularly up to speed with what’s on offer by way of mortgage loans then utilising the services of a mortgage broker is essential when negotiating your first home buyer loan or refinancing an existing one. If you choose to simply approach your own bank for a mortgage it is a rare situation indeed where you will find them offering a cheap interest rate. They will perceive you as a “captured client” who is not likely to compare their loan or mortgage with any of their competitors. Too often borrowers and first home buyers simply apply to their own bank or that of their parents but surveys indicate that by doing so, these borrowers do not receive as competitive rates and terms as those borrowers who apply to a lender through a mortgage broker.

The benefit of using an MFAA accredited mortgage broker is thus three-fold:

it saves you considerable time in that you do not have to do the leg-work of running around trying to find the most suitable and competitively priced home loan
it saves you money in that the mortgage broker is up-to-speed with any specials and good loan offerings at any given time
you have the added protection that in the unlikely event of a complaint, you can access a free and independent dispute resolution process.

My choice finance is a mortgage broker company, it offers competitive rates for

first home buyer and home finance.

Mortgage Brokers in Australia Will Save You Time and Money

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A mortgage broker offers loan products of various lenders. Essentially, a mortgage broker is a loan provider who serves as a contact between borrowers and lenders.

A mortgage broker will learn the needs of the borrower and start researching the market for the best loan deal from lenders offering that particular type of mortgage loan. Mortgage brokers usually work with numerous lenders, attempting to match the right lender with each individual client – be you a first home buyer, upgrading to a new home or looking to refinance an existing home or investment loan – it is worthwhile to engage a mortgage broker.

He or she will invariable advise borrowers on ways to obtain better loan rates. Brokers answer questions and assist borrowers in understanding both the loan application process and the specific loan details, terms and conditions as well.

A mortgage broker usually works within a firm but can operate independently.

Most people use mortgage brokers to get access to a greater range of mortgage options, for better service and for the mortgage broker’s ability to negotiate with lenders. A mortgage broker offers loans from a panel of financial institutions, including banks and non-banks. Using a mortgage broker is now an essential part of scouring the market for the prefect home loan. They originate the loan while the mortgage lenders’ actually fund the credit.

Finding the right home loan can be very stressful for borrowers, this is one of the reasons why mortgage brokers are good value, as they do the research for you, deal with the banks on your behalf and provide assistance in completing some of the paper work that is involved in arranging a new mortgage.

Some of their main roles include; taking the application, performing a financial and credit evaluation, produces documents and closes the agreement.

Mortgage brokers are one of the largest distributions of different kinds of mortgage products.

The biggest benefit gained from using a mortgage broker is their access to loans. A broker can save a borrower thousands of dollars if they’re able to deliver the right home loan at the lower cost possible.

By searching for loans through a broker, a borrower receives information on cost and accessibility of credit from several lenders in a solo enquiry. Borrowers who are unfamiliar with the mortgage industry, may decrease the cost of learning about the availability of different mortgage products, terms and lenders through using a broker.

It is the liability of the mortgage broker to know as many details regarding mortgages and loans to inform their clients on what will be the right choice for them.

If you are not happy with your current loan arrangement or at any time through the life of your loan, you are able to contact your mortgage broker to determine if this is still the best loan for you. Mortgage brokers will are able to look into your current situation at any time and decide if there is a better option for you.

My choice finance is a mortgage broker company, it offers competitive rates for

first home buyer and home finance.

Mortgage Brokers in Australia

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Mortgage Brokers In Australia most people go to mortgage brokers to get access to a greater range of mortgage options, for better service and for the mortgage broker’s ability to negotiate with lenders. A mortgage broker offers loans from a panel of financial institutions, including banks and non-banks. In Australia there are literally hundreds of lenders with many options, that were traditionally available in the past and competition amongst lenders for customers is fierce with new home loan products available every day. Using a mortgage broker is now an essential part of sourcing the market for the right home loan. In plain terms, mortgage brokers evaluate your situation against the 20 or 30 lenders on their panel for the best deal. Specialised mortgage lenders offer competitive products to first home buyers, self employed and business people, retirees, new Australians and immigrants, previous bankrupts and people with a bad or poor credit history. One of the great advantages of using a good mortgage broker is that they have access to many of these lenders and their products. The mortgage broker should be able to provide you with the cheapest home loan to the most competitive home loan in the current financial market. The mortgage broker should be able to provide you with at least three options of which lender suits you best. The mortgage broker should be able to explain in detail each home loan product he/she is offering and why they have chosen these home loan options for you. The options the mortgage broker provided is from the information that you have provided to them. This will show if the mortgage broker has done their homework correctly. Mortgage Brokers usually run their own businesses. Lenders work with mortgage brokers because they effectively give the lender a bigger “shop front” without carrying a traditional employee or “bricks and mortar” overhead. Some lenders like Citibank, ING, Macquarie Bank and Heritage have few or no branches and partly rely on mortgage brokers to represent their products. Other lenders like CBA, Westpac, ANZ, NAB and St George have their own branch networks, but simply extend their access to Customers through the mortgage broker network. The lender pays the broker fees or commissions for your business. Just as if you were dealing with a bank manager or lender, these fees do not change the interest rate you pay on a home loan. To be sure you are being recommended to the right lender, just ask your mortgage broker to show you all the lenders on their panel, and what your loan options would be, against each lender’s criteria. What a Broker should do for you When you first meet with a broker, they should always start by asking you to explain your entire finance situation, including future plans. Little things can make a big difference to making sure you get the right home loan for your situation now and with flexibility for future changes. Have your key documents on hand to refer to when meeting with the broker so you can give the most accurate details to ensure you get the right home loan. Your Mortgage Broker should: Discuss and confirm loan scenarios and options in writing Explain all documents of the loan application and assist in completing the loan application Explain the loan process, from start of the application to closing Explain all associated costs, fees and disbursements of the loan application Communicate with you throughout the loan process Follow up the lender for you from application through conditional and on to unconditional approval Negotiate with their lender or lenders to achieve the best deal How do I know a mortgage broker is any good? Establish the right mortgage broker for you and check his/hers experience and qualifications. A good mortgage broker will be committed to the industry’s code of practice. It is vital to ensure you’re getting the best loan for your needs. Below is a checklist that will help you know if your mortgage broker is a good person For residential loans, all of the mortgage broker’s services should be free – remember mortgage broker’s are paid commissions from the lenders The right mortgage broker will take the time to really understand your entire finance situation, both now and into the future Your mortgage broker should have a range of home loans from a wide variety of lenders, for example, banks and non-banks, conforming and non-conforming lenders Check that your mortgage broker is not just an agent for one lender Check the qualifications and experience of your mortgage broker, even ask for references from previous borrowers Is the mortgage broker a member of MFAA – Mortgage & Finance Association of Australia / FBAA – Finance Brokers Association Australia Ensure your mortgage broker discloses all commission and payments received by the lenders Ask your mortgage broker to show you how the loans they offer compare to your own situation (on a computer). Good mortgage brokers should have the appropriate software and be able to clearly outline options requested by you Ask your mortgage broker how they comply with the Privacy Act to ensure security of your personal and financial details Your mortgage broker should have appropriate insurances (for example Public Indemnity Insurance Cover) A good mortgage broker should be able to explain the most complex loans in simple plain English In conclusion you would like to have trust in the Mortgage Broker that you will use. It is important that you take your “gut instinct” when you are choosing a Mortgage Broker. You want to make sure that you like the person and ensure that the Mortgage Broker will do the ring thing for you. It does not hurt to ask the Mortgage Broker for testimonials (what other customer have said about them)

The author is the managing director of My Choice Finance, the company is a
mortgage broker offering
cheap home loan and home loan finance

Second Mortgage Industry in Australia

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These are tough times if you need a loan but don’t have sufficient or unencumbered property to offer as a collateral to the Bank or other financial institution. Cash is King and if you need more liquidity fast but your first mortgage lender will not advance any more or cannot act quickly, you might be in unforeseen trouble. A Second mortgage might be the best possible option at this difficult time.

Like many other countries of the world, the mortgage market in Australia has tightened considerably and extensions or increases to existing facilities that might have been offered 12 months ago are simply not available today. Many people in Australia, especially those in small business have been able to overcome short-term financial hazards or “cash crisis” and improve their position through a short-term second mortgage.

Second Mortgage

You may or may not have heard about second mortgages. In simple terms, a second mortgage is made against the same property, which is offered as a collateral in the first mortgage but usually to a different lender. Hence, it is considered subordinate to the first mortgage and ranks behind the first mortgage in terms of security.

The interest rate of second mortgage is higher than the first mortgage. This is because, in case of default, the first mortgage is paid out first then the second mortgage is satisfied from the remaining equity.

Usability of Second Mortgage

In a nutshell, a second mortgage is most beneficial when the borrower needs finance for a specific purpose for a short period of time and they can see how the second mortgage finance can be repaid in the short term. It is a good source of finance for opportunistic investments, or to satisfy an urgent unexpected expense. It is often used as a short-term cure for a business cash crunch or even to take advantage of a business opportunity that presents itself where the business operator can see that he or she can make money, IF they have some money NOW!

Other reasons for a short-term second mortgage might include the need of improvement of existing homes prior to sale, or bridging finance for the purchase of a new property prior to the sale of an existing property.

Overview of mortgage market in Australia

The Australian mortgage market witnessed a tremendous boom during 2003 and 2004. However, earlier this year the market observed a sharp decline in its rate of growth with 12% growth being recorded in contrast to 22 % in 2004.

An analysis conducted by InfoChoice and The Sheet estimates that the Australian mortgage market presently stands at $922 billion. It has been observed that this estimate is around three times greater than the report of Reserve of Australia. It is noteworthy that this study is also 12% bigger than the all-banks estimate in the mortgage industry of Australian Prudential Regulation Authority.

As a rule all big banks play a major role in the market, but usually only provide loans against first mortgage security and do not operate in the second mortgage space. Finance and mortgage brokers originate an increasing share of this Australian mortgage market and these brokers can usually source either first or second mortgages from a wide range of lenders.

Rise of Second Mortgage in Australia

As traditional lenders become more reluctant to lend to existing customers due to tighter credit requirement and liquidity limitations continue in the banking system, more and more borrowers with a need for a short term remedy are turning to a second mortgage lenders to solve their temporary or short term liquidity problem to take advantage of opportunities or to solve their short terms problems.

To be eligible for a second mortgage, you must have surplus equity in your current property. This means that you must owe less with your current mortgage than the value of the property. The second mortgage lender will need to be comfortable that there is a good commercial reason for the loan and that there is an “exit strategy” for the loan. This means that the second mortgage lender can see how the loan is coming to be repaid through some event or process that will satisfy the advance and the charges for the loan.

Nandini Sen is a content writer and she is writing for Nova Star Finance. Presently she is researching on second mortgage Australia and debt consolidation Australia.