YBR hits back at another damning report about brokers

by Julia Corderoy07 Jun 2016
Major mortgage and wealth franchise Yellow Brick Road (YBR) has dismissed another condemning report about mortgage brokers in the mainstream media.

A column in the Herald Sun over the weekend again linked mortgage brokers to financial planners – and the financial planning crisis which has rocked that industry – and claimed brokers are “up to their eyeballs” in “murky backhand commissions and sweetheart deals” from the major banks.

“Mortgage broker, financial planner, financial planner, mortgage broker, hmmm, same same,” the column read.

However, the CEO of lending at YBR, Tim Brown has said it is an ignorant comparison.

“Comparing mortgage brokers to financial planners is like comparing apples to oranges. The system is transparent with all commissions declared in the credit proposal given to the clients,” he told Australian Broker.

“The Yellow Brick Road Group currently has over 35 lenders on the panel and all are used at different times depending on rate or product feature, commission does not even come into play when making sure the client gets the right product.”

Brown also responded to claims in the Herald Sun that there’s “little chance” of a broker recommending a loan from an independent lender outside of the big four. 

“The big four have a pricing advantage over the smaller lenders because of scale. As an industry we have raised this with the Government and they have advised us they are happy with the competitive landscape of home loans.

“The Yellow Brick Road Group generally averages 25-30% of our loans written outside the big 4 banks providing increased competition to a variety of choice for consumers.”

According to data from YBR, home loans directed to the major banks and their subsidiaries by YBR mortgage brokers decreased in March, comprising 69% of all loans settled. Loans directed to independent lenders outside of the big four and their subsidiaries increased to 31%. 

Finally, Brown refuted claims by the Herald Sun columnist that loans organised through mortgage brokers have a higher default rate than other types of loans.

“We have yet to see any proof that substantiates the claim of higher arrears through mortgage brokers. The data we receive from lenders consistently shows us otherwise. Regardless, the banks make the credit decisions, not mortgage brokers,” Brown told Australian Broker.

This comes after the Australian Financial Review published a report claiming the standards in the mortgage broking industry continue to lag those in other sectors. This prompted both the MFAA and FBAA to correct these claims and defend brokers.


  • by Bill 7/06/2016 8:49:48 AM

    Who's holding the journos to account?

    If we looked at the fraud committed with loans in volume and consequence, I think we'd find the broker channel has a better record than the banks own sales channels. The People that are committing fraud are more likely to come from the banks because they know how to manipulate the system.

  • by shan 7/06/2016 8:58:12 AM

    They always target the planner or broker rather than the bank entities/ licencees themselves. CBA has been in the middle of all the major scandals and what was the result?

    The industry brings up the education and compliance bench mark costing everyone as it is a lot cheaper than taking on a major bank. Were there many margin calls from CFS when Storm Financial was falling? The advice given is as good as the compliance monitored and carried out by the licencee.

  • by Patrick 7/06/2016 9:17:02 AM

    I have been in the industry 20 years and I rarely recommend the major 4. They might have a cost advantage but it shows up in their profits not in their lending rates. Most importantly, the bigger they are the poorer the service.

    Then there are the FEES, the majors have fees for everything. Account keeping fees, fees for every minor amendment to your loan structure, a fee to renew a fixed rate and for some a fee to let you pay interest in advance.

    I use multi-account structures to ensure that debt is both tax efficient and that interest rate risk is well managed. Do this with a fee charging monster and the effective cost is uncompetitive.