The rise in borrowers switching lenders to refinance their mortgage could devalue trail books, says a leading analyst.
Max Franchitto, management advisor and business analyst at MGF Consulting Group told Australian Broker Online it would be increasingly difficult to sell books for two to three times their value.
“Theoretically, [if] I buy a book from another broker, I’m not assured that I’m going to retain those clients,” he said.
“You can’t get that for a financial planning book, unless it’s in great condition. You’re not going to get that for a mortgage book.”
He said the abolishment of exit fees earlier this year contributed to borrowers treating mortgages like any other “commodity.”
“With the new world of no real barriers to switching, you can’t do anything [to] stop the client from getting their money for a mortgage elsewhere.”
Brokers were also on the receiving end of consumer switching, he said, due to increased advertising of broker services.
“There’s no real loyalty ties to a particular product, nor - and this is a contentious point - is there anything that ties loyalty to the broker.
“Because, at the end of the day ….there’s a multitude of offerings out there,” he said.