Average broker incomes drop $9,000

by Miklos Bolza09 Nov 2017
The average pre-tax salary of mortgage brokers has decreased by $9,000 since September last year, a new report from the Mortgage & Finance Association of Australia (MFAA) reveals.

The industry body’s latest Industry Intelligence Service (IIS) Report found that brokers are earning a yearly average of $133,500 before costs from upfront and trail. This was down from the $142,500 found in the previous report.

Breaking this up, the average gross upfront commission per broker prior to costs is around $77,000 while the trail is around $56,500.

“Out of this gross commission figure, brokers have to pay their own salaries, all their fixed costs of doing business, premises, service provision fees paid to aggregators, marketing and communications expenses, telecommunications, entertaining clients, data services, market data subscriptions, insurance policies, travel costs, support staff’s salaries and wages,” the report said.

The report also found that brokers now write 53.6% of all mortgages in Australia, a strong performance in the context of increased regulatory measures, said MFAA CEO Mike Felton.

However, he pointed to a number of industry warning signs to be aware of. While the number of finance brokers within Australia has increased by 3.3% to just over 16,000 between October 2016 and March 2017, this exceeded upturns in the value of broker-originated loan settlements which increased slightly by 0.1% to $94.6bn as well as the number of new loan applications through brokers which dropped by 4.5% to 303,300.

These figures should be grounds for caution, Felton said.

“It is not a sustainable trend to have broker numbers continually rising faster than the value of new business written and could be part of the reason why the report shows the average income for brokers is down 6% nationally. When the pie stays the same size and there’s more mouths to feed, the slices inevitably get smaller.”

This can be seen through lower levels of broker remuneration found in the IIS report.

Other key figures found in the MFAA’s paper include, but are not limited to, the following:
  • There is one mortgage broker for every 1,500 Australians
  • The average value of new home loan settlements per broker equals $5.9m
  • The number of brokers writing commercial loans has risen by 11.5%
  • The average value of a broker’s home loan portfolio is $38m per year
  • 47% of all new lending from brokers goes to the smaller lenders
  • The number of women in broking remains stable at 27.0%
  • 45% of brokers settled $2m or less between October 2016 and March 2017
  • Broker turnover rose to 10.2% during the reported period
The IIS Report is designed, produced and delivered by CoreLogic-owned Comparator using data from 14 major aggregators.

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COMMENTS

  • by Pfft 9/11/2017 8:47:02 AM

    If you only write 2m in 6 months why are you wasting your time in this industry. Go work at bakers delight you will earn more money.

  • by Broker 9/11/2017 2:39:16 PM

    Ditto, if you are only settling 5.9MIl per annum!

  • by Steve McClure 9/11/2017 4:32:02 PM

    Analysis of the MFAA stats: 16,000 brokers writing $94.61Bill = ave $5.9Mill pa per broker. Applying the 80/20 rule, 20% (3,200) of the brokers write 80% of the total, i.e. $23.6Mill, close enough to $2Mill pm. That leaves 12,800 brokers writing less than $1.5Mill per year each, unsustainable. However, some brokers are asset finance, predominantly or exclusively. So, the market is saying we have too many brokers, or is it that dormant brokers are just remaining "current" to collect trails and that the figures don't account for all sectors of the industry?