The Banks and the Mortgage
Over the past period licensed mortgage brokers have skilled boom times. Mortgage Choice, RAMS, Wizard and others delayed to meet the demand for credit from the proliferation of non-bank credit providers; until recently. There’s no escaping the brutal reality of the credit crisis: it’s hitting the non-bank sector hardest.
According to the Mortgage & Finance Association of Australia (MFAA) the market share of non-bank mortgage originators has declined from a peak of 15 per cent to about 4 per cent; effectively bringing an abrupt halt to the trend from the late 1990s. The appeal of buying into a branded, non-bank franchise may be waning.
Mortgage brokers often work in what are referred to as a franchise environment. This is distinct from a being an “independent”. A franchisor has a lot of controls placed on the mortgage brokers. Consumers do trust brands but the franchisees are disadvantaged by not being able to operate freely in their markets. Commission structures are often stacked in favor of the franchise group; the agreement terms are onerous.
The promises made to mortgage brokers who seek to take buy a franchise or to work within a franchise environment is that leads will be provided. Mortgage brokers however, thrive on good quality leads. More often than not however, the quality of leads is minimal. They are usually web-generated and often when you follow them up they don’t know why you are calling.
Other mortgage brokers join “aggregator” groups. In the market as it stands today, mortgage brokers need to be “approved” by banks before making mortgage applications on behalf of clients. Independent brokers need to achieve volume hurdles to get access to banks and other lenders. These groups manage a lot of the compliance, professional indemnity and training services and enable smaller firms to gain access.
Small businesses Stability Mortgage
It is useful to understand that many experienced brokers won’t go into franchises; they don’t need the training. On the other hand, franchising is a resilient business model and offers many small businesses stability, systems, buying power and brand strength that could give them an edge over independent retailers and service businesses.
Online Mortgage Lender
Shopping for a mortgage lender online may seem like a scary prospect, but understanding a few basic facts will make you feel much more comfortable. When exploring the website in your search, be sure to look for a physical address and telephone number where you can contact a live human. Do not fill out an online application which asks for your Social Security number. Although you will eventually be providing this information to your online lender, you will want to make sure you are comfortable with the person on the other end of the internet connection or phone line before you do. Websites that advertise that they will let the lenders compete to get your business are actually lead providers that sell your contact information to multiple brokers. The idea that several lenders will be bidding for your loan is only true in the advertisements, it is not reality.