The amount that mortgage brokers get paid might have dropped since the Royal Commission due to the rising costs of compliance and regulations.
Average wages for mortgage broker back in 2018, the last time that a major survey was carried out, cited a ballpark figure of $86,000 in take home pay.
The average earnings, taken from a different study in 2016, were estimated at $142,000, with running costs then to be deducted down to an actual wage.
The Finance and Brokers Association of Australia (FBAA) has commissioned a new independent piece of research into the state of the industry.
CEO Peter White, speaking to Australian Broker, said that while it was impossible to say yet what the average mortgage broker pay was in 2021, the inkling was that the cost of compliance had likely caused it to fall despite the upswing in revenues that had accompanied the housing boom.
“I actually think it’s gone down,” he said. “It depends how you want to cut it. In one respect, with house prices going up and LVRs being a percentage of purchase price, brokers are earning more gross revenue.”
“But the cost of compliance has gone up, so when you look at what brokers take home net, they’re going backwards.”
The FBAA has commissioned a second independent report into wages in the broker channel, which is due to be released in the near future, which will factor the new, post-Royal Commission price of compliance into the general debate about how much the average mortgage broker earns.
“At the end of the day, it is as much the cost of business that is going up,” said White. “The cost of compliance and risk: you have to remember that brokers are on the hook for two years because of clawbacks, and you have to provision that risk somewhere on the balance sheet.”
“Increasing costs with ASIC, AFCA and associated risks are all increasing too. As a results of these extra costs, the FBAA hasn’t increased membership fees for three years, because we’re trying to assist brokers with increasing expenditures.”
“I can’t give a measure on the dollar value, but we know that costs are going up. There’s more activity, but there’s also more people in the industry compared to 2019, so it’s spread out across the whole industry.”
White recently told Australian Broker that, despite some claims in the media and the increasing cost of compliance, brokers were net joining the industry rather than leaving.
However, that brings with it the idea that those leaving are generally wealthier brokers, who have generated large trail books over time, while those joining are less well off as they begin their journey in the industry.
Are average mortgage broker wages being slanted unevenly towards older, more established broker and away from newcomers?
“It’s an interesting debate,” said White. “But my first response is probably not. You’ve got a lot of people who have been in the industry for a long time, so to swing the balance isn’t going to take place overnight.”
“In saying that, there’s a constant inflow of people into the business. Except through the Royal Commission period, when the handbrake went on. We didn’t grow, but we didn’t increase either. When that happened and we saw a dip in the numbers, I likened it to a bushfire.
“The Australian bush survives through the bushfire, but sometimes something has to go through and clean out the ground. The weakest goes and what is left behind is a lot stronger going forward. We went through a similar thing, and people that weren’t completely in the game got out.”
“They made their decision, either because they were close to retirement, or only did a couple of loans a year, or they were still debating whether they wanted to be fully in. They made their decisions. At that time, there was a lot more people who said enough was enough.”
“But that’s turned, as the strength of the industry resounds into the marketplace. It’s a sector that people want to be part of. You’re fulfilling people’s dreams and it’s great, and of course you need to be able to make a quid out of it, like any business.”
