News

Mortgage brokers have a win as federal government eases commissions policy

30 October 2019

Mortgage brokers have another win from the federal government after buying more time to earn commissions for draw downs on extra debt.

Borrowers typically ‘draw down’ when requesting more funds than the purchase price to fund renovations.

‘Best interest duty’ terms have been extended to 365 days from the proposed 90 in a policy Treasurer Josh Frydenberg announced this week.

The government’s ‘best interest duty’ reforms for mortgage brokers limited the payment of commissions to be linked to the amount drawn down by borrowers instead of the total potential maximum loan.

A bank would pay the commission to the broker for any extra loan amount drawn down within 90 days which has now been extended to 365 days.

Mark Hewitt from Australian Financial Group is a supporter of the policy announcement.

“Thanks to Mr Frydenberg and the government for consulting with the industry and reaching this sensible outcome,” he told Australian Financial Review.

“It will ensure brokers continue to be fairly remunerated for their hard work in finding the right solutions for their customers.”

Those opposed to the extended terms say a 90-day draw down period safeguards against the broking industry recommending larger mortgages than people need in order to maximise commissions.

To counter these fears the government has introduced a ‘best interest duty’ and is banning campaign and volume-based commissions.

Latest

The best thing you might want to do if investing in commercial property is assemble a ‘dream team’ of experienced operators that understand the process and understand why you are investing.

Read more

Mortgage Professional Australia has announced that Perry Finance Director and Melbourne Finance & Equity Group CEO Cameron Perry is one of MPA’s Top Ranked Commercial Brokers of 2022.

Read more

Prospective home buyers and investors are being warned to temper their expectations as the dust settles on the Reserve Bank’s first interest rate rise in years.

Read more

The Reserve Bank this week pulled the trigger on interest rates as expected, hiking the official cash rate by 25 basis points to 0.35 per cent.

Read more