Trailing commissions paid to Mortgage Broker on completed cases could soon be a thing of the past.
At a recent seminar the FBAA suggested that trailing commissions might not have a long term future. Some lenders have already reduced the amount of trailing commission paid to mortgage brokers and the trend may continue.
When a mortgage broker completes a home loan for a client part of their remuneration from the lender is paid on completion and the remainder is received over time as a trailing commission.
Currently, Australia is the only country in the world to remunerate mortgage brokers this way.
Several banks have already told brokers that they will not pay a trailing commission for the first year of a home loan and will only begin payments in the second year.
Trailing commissions offer an incentive to brokers to participate in the long term management of their clients’ home loans.
Several prominent mortgage brokers have already expressed dismay that clawing back trailing commissions may encourage churning as brokers will have more incentive to encourage their clients to refinance every few years.
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