The Bull

Monday 18

February, 2019 5:53 AM



Macquarie warning over mortgage broker pay

Macquarie warning over mortgage broker pay

Macquarie Group has sounded a note of caution about any potential changes to the way mortgage brokers are paid.

Share |

By AAP 22.11.2018 02:18 PM

Changing the commissions paid to mortgage brokers would affect competition in the home loan market, Australia's largest investment bank has warned.

Macquarie Group believes brokers play an important role in allowing lenders to compete against the big four banks.

It is concerned changing the payment structure, such as through requiring consumers rather than lenders to pay brokers, could affect the mortgage broker distribution channel and therefore competition.

Macquarie's outgoing CEO Nicholas Moore said the group's general point was one of caution that there could be unintended consequences of regulation.

"We think, having regard to history, that the broker network does provide genuine competition, and that genuine competition has reduced the cost for all mortgages," Mr Moore told the banking royal commission on Thursday.

"Our nervousness would be regulation could severely hamper that broker business.

"So we're providing a note of caution in terms of any thoughts about changing the regulatory structure, that people think broadly about what the implications may be."

Macquarie is the eighth largest player in the mortgage market, which is dominated by the big four banks.

Macquarie said it introduced mortgage securitisation to the Australian market in the 1990s, enabling non-bank lenders to compete in the mortgage market.

That competition ultimately resulted in a 2.5 per cent reduction in interest rate spreads paid by consumers, it said in a submission to the royal commission.

While the big banks are large users of mortgage brokers, Macquarie said brokers and other intermediaries were particularly important to lenders like itself that did not have extensive branch networks.

Macquarie only has five branches, whereas the four big banks operate from hundreds of locations.

"A decline in the intermediated distribution channel would increase the comparative advantage of the operators of those branch networks," Macquarie's submission said.

Mr Moore, who retires at the end of the month, spent an hour in the witness box at the royal commission's final hearing on policy issues.

It was the first time someone from the investment bank had been called before the inquiry.

Archive
  • Trump to get update on China trade talks

    US duties on $US200 billion worth of Chinese imports are set to rise to 25 per cent from 10 per cent if no deal is reached by March 1 to address US demands

  • SA govt unveils Repat Hospital plan

    The South Australian government has unveiled its master plan to redevelop Adelaide's Repatriation Hospital.

  • US-China talks to boost Aussie market

    Australia's share market is tipped to open higher on Monday after optimism surrounding US and China trade talks.

  • The Week Ahead

    In Australia, the December quarter Wage Price Index release dominates the local agenda in the coming week.

  • ASX closes flat as more companies report

    The Australian sharemarket has managed to finish in positive territory as more companies reported earnings results.

  • Stocks to watch

    Stocks of interest at the close of trade on the ASX on Thursday, February 14.

  • Germany to let NATO use its cyber skills

    Germany is to join the ranks of NATO countries making its cyber warfare skills available to the alliance to help fight hacking and electronic warfare, officials said on Thursday.

  • Domain posts $156.4m loss as listings fall

    Domain's first-half loss has widened to $156.4 million after Sydney and Melbourne's stumbling property markets forced it to take a large non-cash impairment.

  • Farmer denies scaring vegans with gunshot

    A WA farmer who asked vegans to stop filming calves on his property and leave, then fired a shot into farmland, says he wasn't trying to scare them.

  • CommSec Daily Report Friday

    The local sharemarket is mostly flat so far in a choppy session of trade. The ASX 200 is marginally higher by 6 points or 0.1% to 6066 points towards lunch after trading in a narrow 18 point band...

Markets
Index: Points Change Percent

PLEASE SUPPORT OUR SPONSORS, AUSTRALIA'S LEADING BROKERS:



© Copyright TheBull.com.au. All rights reserved.