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Industry risks 'cannibalising' itself: Brown

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Australian Broker | 26 Jul 2011, 06:00 AM Agree 0
The mortgage broking industry must attract new entrants or may end up cannibalising itself, Vow CEO Tim Brown has commented
  • Clint Waters | 26 Jul 2011, 12:19 PM Agree 0
    I agree - we need new brokers all the time. Im 33 and been a broker for about ten years - barriers to entry are getting too difficult (banks & compliance). Clients clearly like dealing with professional brokers so we should not be making it so hard to attract new participants as the older operators begin to leave.
  • mortgageandlease | 26 Jul 2011, 12:25 PM Agree 0
    I agree with above, Brown is kidding himself. The barriers to becoming a broker is becoming so great, who would want to join an industry that is going out of its way to implode and any new entrant will be lucky to make $35,000 - $50,000 in their first 12 months and it is more then likely that they will receive no or very little income for the first 3 months. 75% of current brokers (and I also mean long term brokers) are writing less then $500k per month in new writings. Put that at an average of 0.5% upfront, then you are looking at max $2,500 in new income. Not much to live off after costs.

    How many new brokers will do a $mil (+) a month from day one, Maybe 1 in a 100. Come out and see us in the real world.
  • Peter M Choice Home Loans | 26 Jul 2011, 12:33 PM Agree 0
    Agree without any doubt. If the MFAA takes note they should not make it more difficult to become a broker. It may be far better to implement a strategy to obtain a diploma - say over 5 years of enetering the broker fraternity.
  • 1martym1 | 26 Jul 2011, 12:48 PM Agree 0
    Barriers to entry are what this industry needs so that over time we can build sustainable businesses with the pie being divided by a smaller number of players. Bring it on I say. Being 38 I am looking forward to the current brokers in their late 50's and early 60's retiring.
  • Melbourne Broker | 26 Jul 2011, 02:12 PM Agree 0
    I agree with Peter, it is time to have a good look at the relelvance of the MFAA as they are causing undue grief to new entrants. With the involement of ASIC, Lenders and Aggreagtors, the MFAA is just adding another level of uneeded complexity.
  • Daniel Son | 26 Jul 2011, 03:41 PM Agree 0
    'Mortagegandlease' if 75% of current brokers are writing less then $500k per month in new writings at an average of 0.5% upfront meaning they earn $2,500 in new income per month - there's the main barrier to entering this industry.
  • mortgageandlease | 26 Jul 2011, 04:16 PM Agree 0
    Daniel Son: Precisely my point, maybe didn't put quite correctly. I think there is a perception out there that Mortgage Brokers make bucket loads of money and many of the franchise models seem to sell that to new entrants (including them paying some hefty buy in costs) and the reality is, most brokers probably don't make more then $50 - $100K per annum. Mr Brown is flagging that they are gonna try and recruit new writers, not poach from competitors. He might find that finding and recruiting might be a bit harder then anticipated. He might be able to get them to come in full of vigor, eyes bright with enthusiasm and then the reality hits that it is not that easy and there is not buckets of money to be had.
  • Broker | 26 Jul 2011, 05:07 PM Agree 0
    If I was writing less than 500K a month ( equating to 1 or 2 loans a month) I would be looking for another profession real fast, as not only would I be bored out of my brains, but clearly my network is way too small to succeed in this industry.
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