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Momentum Markets director Alex Whitlock outlines why he believes the payroll tax issue facing aggregators is a ‘criminal act’ that would ultimately impact borrowers.
Revenue NSW’s move to recoup millions of dollars from the mortgage broking industry is a big issue for aggregators.
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The bigger issue though, if this is enforced, is that this will be another significant burden on the mortgage broking industry.
We all know within the industry that brokers earn very meagre living for what they do. We know that the margins for aggregators have been eroded over the years. This is another layer cutting into cash flow for aggregator businesses.
As far as I can see, aggregators will have no option other than to pass this on through to brokers, which just makes mortgage broking significantly harder and, in many cases, probably untenable.
It’s an absolutely criminal act for this to move forward without proper consultation.
The ramifications for the industry are absolutely critical. But the impact of this move will not only be absolutely devastating to an industry that provides a huge service to so many borrowers, but also to borrowers themselves. It is ultimately Australian mortgage holders who will suffer.
Fewer brokers means less choice for borrowers. This is going to force borrowers back to a smaller number of lenders as competition becomes eroded; force them back to the high-street banks; force them to have to go to the biggest institutions.
And think about the regional borrowers who already struggle to access finance in many scenarios. What options will they have to access mortgage advice and mortgage products offered by the smaller lenders who depend on brokers for distribution?
The payroll tax issue impact is absolutely vast – particularly as, demographically, we have a very significant population here in NSW. It’s going to have a huge impact on a great many people in Australia.
With NSW heading into a state election, the timing is critical. This issue isn’t just about voting mortgage brokers – I would suggest it’s also about voting borrowers.
Brokers now have 70 per cent of the [mortgage] market share and most brokers have an exceptionally good relationship with their customers.
At the end of the day, if mortgage broking goes, the cost of borrowing will go up. We know this is a fact; we’ve all seen the price of mortgages before brokers drove it down.
So, I think that the government is treading on fairly thin ice and gambling with so many voters at a sensitive time.
It’s going to affect an awful lot of people in NSW.
Action is needed, and it is needed now.
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