Despite the doom and gloom surrounding the property market in Australia, it is expected to bounce back to more normal levels. In terms of market size, the mortgage broking industry in this country is already increasing and is showing no signs of slowing down. Here is what you need to know about the mortgage broking industry as a whole and how much a mortgage broker in Australia can earn.
There are many benefits of becoming a mortgage broker in Australia, not least of which is that you can save thousands of dollars on costly tuition fees since, unlike most career paths, you will not need a degree to become a mortgage broker.
The minimum educational requirement for this industry is a Certificate IV. It also lets you progress more quickly. After becoming a mortgage broker, you will have to fulfil your Continuing Professional Development (CPD) requirements, which will keep you updated on industry regulations and trends and keep you on top of your game.
Another benefit – and perhaps the biggest one – is that, as a mortgage broker, you will have a lot of flexibility. You can work for a brokerage or for yourself. Working for yourself means you control your hours and can help you strike a great work-life balance. Working for a brokerage, on the other hand, means you will not have to establish your own client base as much. Working for a brokerage will also mean you have more consistent income and therefore more financial security.
In terms of market size, the mortgage broking industry in Australia generated $2.9 billion in revenue in 2022, according to IBISWorld. With its average growth rate expected to increase by 4.9% this year, the market size of the mortgage broking industry in this country is anticipated to rise more quickly than the financial and insurance services industry overall. To put that into context, the mortgage broking industry is currently ranked 17th in the financial and insurance services industry by market size as well as the 303rd largest in Australia.
What’s more, there does not appear to be any signs of slowing down. The mortgage broking industry has grown 2.1% on average each year between 2017 and 2022. In fact, the market size of the industry in Australia has increased faster than the national economy overall. The industry’s biggest opportunity for further growth is the number of housing transfers, which is an indicator of activity in the residential property market. Generally, the demand for mortgages and therefore mortgage brokers increases as a result of more housing transfers.
In Australia, the average salary for a mortgage broker is $188,046 according to the Mortgage & Finance Association of Australia Industry Intelligence Service 13th Edition report for the six months to September 30, 2021.
Because mortgage brokers offer special skill sets that go beyond simple product knowledge, finding a good fit for mortgage products includes knowing client circumstances such as their needs, risks, goals and more. A good mortgage broker will therefore bring added value to transactions by ensuring all the paperwork is in order and submitted promptly – and to a high standard.
Achieving that standard also requires people management skills as well as good organization. In other words, your value as a mortgage broker carries with it the ability to build and maintain multiple relationships with different parties like lenders, clients, and occasionally third parties like co-signers or guarantors.
If you can navigate these relationships successfully as a broker, you will be compensated well for your efforts. Another breakdown for the income a mortgage broker earns is that, on average, you can make just over $2,200 per week in upfront remuneration alone. That is more than Australia’s national average for full-time income, which is $1,769 per week, according to the Australian Bureau of Statistics. If you are a practice owner or a senior practitioner, you can expect to make much more than this.
Mortgage brokers get paid in a few different ways. One way is to work for a lender and receive a salary with a variable bonus structure. Another is to work for finance and mortgage broking practices, or licensees, and receive pay purely through commissions on the transactions that you settle.
This second form may also net you a “trail,” which is a commission for the duration of the loan. Additionally, a client can be helped by the same broker multiple times over a lifetime, such as helping to seek out a better mortgage deal after a couple of years when the loan-to-value ratio (LVR) or other factors have changed. Administrators, who work on client files, and other employees in the industry are typically paid a flat salary.
For introducing clients to home loans in Australia, mortgage brokers also receive commissions from lenders, meaning that brokers are paid by the lenders rather than the customer. This form of payment is known as “upfront commission.”
