Mortgage brokers boost bank profits – RESI
Non-bank lender RESI Mortgage Corporation says mortgage brokers are “de facto agents for the banks” who channel home buyers' money into propping up huge bank profits. They're trying to project an image of providing an alternative to banks, Peter James, joint MD of RESI said, whereas they are in fact directing most of their customers to bank loans.
Mr James said that March 2002 quarter data from Market Intelligence Strategy Centre show that 60 per cent of the loans generated by mortgage brokers are directed to the four major banks. People who are fed up with banks and deal with mortgage brokers are playing right into the banks' hands, Mr James continued.
He said there are major issues of concern for home buyers turning to mortgage brokers: how much of the advice they're given is motivated by whichever bank will give the broker the largest commission; and how genuine is the broker's claim that he is offering you the best loans when often the better-priced loans are not on his books.
Mr James said the mortgage broking industry is due for a clean-up and he welcomed recent government interest in its regulation. A first step is to require brokers to disclose their commissions in advance to clients, he said.
See InfoChoice’s tips on using a mortgage broker