Mortgage brokers are becoming an increasingly hot commodity, with the recent KPMG report on financial institutions estimating that some 17 per cent of new mortgages last year were originated by brokers, compared with just 7 per cent in 1996. Good Returns talks to NZ Mortgage Brokers Association chairman Rob Tucker about the huge growth of his industry and what the association is up to.
__What does it mean to be a member of the NZMBA?__Members must have public indemnity insurance to at least $1 million. They are bound by the code of conduct, our membership rules and rules of discipline.
They first become provisional members for six months and during that period they have to advertise in the Public Notices section of their newspaper and seek objections to their membership (it has happened!).
Potential members must also supply a credit report, references and details of their experience.
We are also working with banks and other financial institutions at the moment, and it's likely that they won't be dealing with other than members of the Mortgage Brokers' Association.
__How are your codes of practice upheld?__Policing of the codes is more reactive. We make members aware of their obligations through our conferences, newsletters and so on.
People can complain to the association (complaints must be in writing) and we have a disciplinary committee which will review these. So far, we've had only one complaint about a member (but we do get calls to our office about non-members).
__Are members required to have any qualifications?__We're currently talking with Massey University and a company called AdviserLink to put in place a training programme, which should be ready within the next three months.
We're not here to teach them how to be successful brokers, but we're here to teach them how to understand their industry.
__Will this be compulsory?__We'd like to see this becoming compulsory, but it's still early days yet. Certainly, we would recommend that an applicant (for membership) that we feel hasn't had much experience does this programme.
__We've seen considerable growth in the use of mortgage brokers. Do you believe that this will continue?__Absolutely. One, because we have over 20 recognised home lenders in the market. The choice people have is vast and they don't really know the best deal: that's where brokers come in. And two, because of the growth of non-bank lenders. They're trying to get into the market, but don't have the branch network like the banks do. They want to use brokers.
__Is the increasing acceptance of mortgage brokers a factor?__That was in fact one of the reasons behind our forming an association; to increase the profile of brokers and to show that it's a value-added industry.
The Mortgage Brokers Association was actually formed in August 1997... after a nucleus of brokers felt it was worthwhile - and that we'd better regulate ourselves before someone else did.
Currently we have about 240 members and membership is growing daily.
How much of the New Zealand industry does your membership represent? How do you define who is a broker? For example, there are a lot of insurance brokers who do the odd mortgage. Our definition for membership is that mortgage broking is their main income and they have at least five recommended home lenders that they can deal with. There are maybe 500 or 600 people in the New Zealand industry who fit that definition.
If someone is choosing a mortgage broker, what do you think they should ask?
- Are you a member of the association?
- What do you charge, if anything?
- Which mortgage lenders do you deal with?
- And do you have a preferred lender? If so, why?
