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An announcement on how Labor will treat mortgage brokers after the Royal Commission recommendations is expected imminently.
According to industry sources, the party has softened its approach to how it will react to the recommendations.
Instead of switching to a customer-pays model, it is thought the party is suggesting a payment to brokers of 1.1% commission.
Industry groups are celebrating the news, with both main parties now recognising the importance of mortgage brokers.
FBAA managing director Peter White said, “It’s great to see that the voices of finance brokers are being heard by our political leaders.
“The conversation is happening and we expect to be able to continue to have a say about the best way forward for the financial services industry so that borrowers can benefit from healthy competition.
“Australia needs brokers and it’s refreshing to see that both sides of politics acknowledge our important role.
“We want to work with government to ensure that the model that eventually emerges from the royal commission provides the best solution for borrowers and an enduring path for brokers.”
Loan Market executive chairman Sam White said, “Last night, finally, common sense prevailed. Labor put an end to the disastrous customer-pays model which would see Aussies foot the bill for a broker’s service.
“This means the mortgage broker industry will stay a viable option for all Australians, not just the wealthy. This is a win for Aussies.
“It’s also a stark reminder on just how powerful some of the banks are and how they blatantly put profit before people. Thank goddess the brokers will stay in the market to keep competition alive.
“I applaud that both sides of politics have seen reason and finally put the customer before the big four’s agenda.”
Finance broker David Collett said it was a relief, "It's a big relief Labor aren't going to rubber stamp Hayne's proposals. The thousands of brokers who aren't controlled by the big four and the smaller lenders, deserve a fair hearing.
"How about we disclose to consumers that the mortgage brokers' aggregator is not owned by a big four bank?
"As for the suggestion of a flat fee, will Labor make the same proposal for all lenders? If not, why single out brokers?
"The appropriate way to limit how much a consumer can borrow is to make sure they can handle repayments at a higher interest rate.
"To reduce the tax burden on future generations, how about we aim to increase the proportion of households who own their home debt free by the time they reach retirement age?
"I'm sure there are thousands of mortgage brokers and many small lenders who would be more than happy to have that conversation with either side of politics."
The MFAA is urging more caution however, until the party come out with their official response. The Australian Financial Review exclusively reported yesterday that Labor sources had said there would be a softer stance when it came to the recommendations for mortgage broker pay.
CEO Mike Felton said, “We don’t want to speculate as to what the opposition’s opinion is. We feel we should wait for that to be disclosed, however if it their position is aligned to what is being outlined in the AFR article, then we would say that it is encouraging they are no longer considering a consumer fee for service and we certainly welcome that.
"We do, however, still have some concerns with regards to a lender flat flee which we believe would challenge the viability of the mortgage broker channel and lead to reduced competition choice and access to credit.
"This is evidenced by testimony to the royal commission back in November of last year where it was clear that one major lender wanted to reduce broker lending fee by two thirds. Any reduction of broker income will challenge the viability of the mortgage broking industry and be a poor outcome for consumers. We continue to differ for the position on trial, which is at odds with the findings of ethics and recent commentary via treasury in their submission to the royal consumer interim report.”
