Labor had planned to ban trailing commissions for mortgage brokers from 1 July 2020, so its defeat at the federal election has been welcomed by the mortgage broking sector. The Hayne royal commission had recommended that trailing commissions be abolished and that banks stop paying upfront commissions to brokers. Labor had stated that it would place a cap on upfront commissions, while the Coalition had merely stated that it would review the remuneration model for brokers in three years’ time. Accordingly, the Coalition’s re-election saw shares in mortgage broking companies surge yesterday, with Mortgage Choice, Yellow Brick Road and Australian Finance Group up 14.5%, 7.8% and 6.7% respectively. From The AFR:
Yellow Brick Road executive chairman Mark Bouris, who made pre-election robocalls to voters warning of the risks of Labor’s negative gearing changes, said the Coalition’s win would be good for YBR and other mortgage brokers.
“They are really energised,” Mr Bouris said. “The group’s distribution is extremely relieved that the Hayne royal commission recommendations will not be adopted when it comes to remuneration for brokers”…
Wollongong mortgage broker and industry spokesperson Katrina Rowlands… campaigned against the changes and described the election result as a great outcome for the industry and its clients. “Hallelujah” Ms Rowlands said.
Mortgage brokers should be grinning from ear-to-ear. Labor’s negative gearing reforms are dead. They get to keep their fat trailing commissions against the advice of the Hayne Royal Commission. And they retain as Prime Minister a key sympathiser for the property lobby.
Remember, Scott Morrison worked at the Property Council as National Manager of Research and Policy from the age of 21 to 26. The property lobby runs through his veins and continues to pull his strings.
Scott Morrison also admitted last week that no modelling had been done on the Coalition’s First Home Buyer Deposit Scheme and that Australia’s property lobby was behind the policy. The policy wasn’t even passed through Cabinet, suggesting it was a ‘captain’s call’.
The intention of this FHB Scheme is also clear: to boost demand and prevent house prices from falling. Scott Morrison made this point explicit last week: “We want to see more first-home buyers in the market, absolutely, and we don’t want to see people’s house prices go down”.
The property lobby has got their man in the top job and they couldn’t be happier.
