While mortgage brokers capture 70 per cent of all business in California, they're comparative newcomers to the game here. However, their popularity is soaring as home borrowers seek extra choice.
To catch up with what's happening in the industry, Good Returnstalked to Rob Tucker, recently reelected chairman of the New Zealand Mortgage Broker's Association. Members of the association must have mortgage broking as their main income, deal with at least five lenders and hold public indemnity insurance of $1 million. They are also bound by a code of ethics and will shortly have to obtain compulsory qualifications (a course has just been developed).
Just what is the percentage of mortgage business now being done by brokers?
In New Zealand, mortgage brokers are arranging between 15 and 20 per cent of all mortgage transactions (that's true brokers - overall third party is closer to 25 per cent). Estimates suggest that demand for our services could grow to as much as 35 per cent within two years.
What have some of the key issues been for mortgage broking in the last year?
Incompetency generally amongst non-members. The issue of mortgage reduction organisations (which attracted a lot of negative publicity last year) is starting to rationalise itself. For mortgage budgetting, most brokers offer that service as part of setting up the mortgage and it's usually free of charge. So for the guys who are offering that at $3,500, maybe their days are numbered!
One of the wider issues that we're still grappling with is who qualifies to be a member. There are a lot of "mortgage introducers" who are just referring clients to one lender, but they're still a third party. Do we let them in so we can have the comfort that pretty much anyone introducing mortgages is qualified to do so and is bound by the code of ethics?
We also currently require (for membership) that mortgage broking is their main business. It's an interesting call, and that's under review as well.
You've talked before about requesting banks and other lenders only deal with MBA members. How is that progressing?
That's starting to gain momentum and it's now in place with all the main banks. When new brokers apply for agency arrangements, a lot of lenders are now insisting that they have association membership.
We have to put something back for that. Our ''value-add" comes through requiring that all members have professional indemnity, through the new certification programme and so on.
What is the latest on compulsory qualifications for mortgage brokers?
We expect a course to be in place very soon. It's being put together by Adviserlink, a firm that already does a lot of work for financial planning certification. The course will be compulsory (for NZMBA members), except that there will be exemptions for the larger broking firms that have existing, comprehensive training programmes.
However, everyone else will have to complete it - even me! We'd expect existing members to have completed the course by the end of the year.
The course will cover all aspects of the mortgage broking industry and can be done by correspondence or as a block course. We'll also be developing advanced courses later on.
Do you think that the public awareness of mortgage broking is improving?
Yes, and we're getting a lot of calls at the association now to check whether brokers are members. The message coming through is that the banks are saying to clients we don't want to see you in the branch, not just for mortgages but for every other product, so brokers are becoming an increasingly important distribution channel.
Earlier stories:
