My father, Bernie Lewis, pioneered mortgage broking in South Australia for all the right reasons. Never before, has the true value of a mortgage broker been more significant.
For the last 32 years, Bernie Lewis Home Loans has been helping South Australians with their finance needs. Over that time we have settled well in excess of 100,000 loans for tens of thousands of our clients, to help them achieve their home ownership dreams and financial goals.
When Bernie first started the business in 1987, his prime focus was on commercial lending and leasing. However, he was increasingly seeing the difficulty ordinary people were having obtaining finance to buy their home. The four major Banks were dominating the market and enjoying interest rate margins of 5-6% on mortgage loans, as well as charging hefty application fees and ongoing monthly fees.
So in 1992, he started a revolution in South Australia by creating the mortgage broking model and distributing loan products from Lenders who didn’t have a presence in the South Australian market, including interstate regional Banks, Credit Unions and Non-Bank Lenders. Not only did this provide greater choice and more competitive products but, for the first time, people wanting a loan weren’t beholden to visiting their Bank during the Banks business hours.
Over the years, mortgage broking has rapidly grown to become the preferred way for many people to apply for their home loan, in fact, nearly 60%* of all new loans are written via Mortgage Brokers.
Competition between Lenders for new loans has also seen the fat profit margins of 5 - 6% decrease to 1.7 - 2%, as well as the large Application Fees and ongoing fees all but eliminated. This reduction in Bank margins is saving people tens, or even hundreds of thousands of dollars in interest payments over the life of their loan. In fact some Lenders now provide upfront incentives via cash backs and free transaction banking to entice borrowers.
The revolution that Bernie started in 1992 continues, and never before has there been greater competition in the mortgage market. A wonderful outcome for everyone who has a home loan.
Disturbingly, the recent Final Report from the Hayne Royal Commission has made recommendations that would decimate the mortgage broking industry and force consumers to pay large upfront fees when applying for a loan. Additionally, those smaller Lenders without large branch networks would be unable to distribute their products thereby reducing choice and more importantly competition. This would force borrowers back towards the major Banks and over time, likely see the Banks increase interest rates and return to their fat profit margins.
Mortgage Brokers have become a federal election issue. At present the Federal Labor Party has stated it will implement the recommendations in full, meaning the end of mortgage brokers and a likely return to the domination of the major Banks. The Liberal Party has announced that it recognises the need for competition in the mortgage industry and will work with the industry to ensure competition and the valuable services that Mortgage Brokers provide, remain viable.
If you would like to support keeping competition alive, you can show your support by visiting the website Broker Behind You (or paste this link in your browser: https://www.brokerbehindyou.com.au) and an online petition at Change.org (or paste this link in your browser: https://www.change.org/p/federal-treasurer-josh-frydenberg-save-the-mortgage-broking-industry)
For us, nothing has changed. The team at Bernie Lewis Home Loans will continue to serve all South Australians to help them get the best loan to suit their needs from our panel of over 30 Lenders. And, we do not charge our clients a fee for our professional service – we are genuinely here to help you.
Written by Mark Lewis, Managing Director Bernie Lewis Home Loans.