Mortgage brokers are vital in any economy, and none more so than the New Zealand economy. Around 40% of all mortgages written each year are completed by mortgage brokers, and they are filling a very big demand gap in the market.
Provided that they can continually win new business, mortgage brokers can make a very large income in the current housing bubble market in New Zealand. The standard commission from Banks is generally around 0.65 for any mortgage plus there is generally a trail commission as well. Hence a mortgage broker writing a 1 million dollar mortgage is going to receive $6500 commercial upfront, for work that is no more difficult in general then writing a $100,000 mortgage or smaller. Their key input into the process is to find the best deal on the market for their client, and that is simply a matter of them having access to good information and having a skill set necessary to determine how to interpret that information.
The time component for a $1,000,000 mortgage is little more then the time component for a $100,000 mortgage, and it may be that the client for the $100,000 mortgage is less able to service this mortgage and therefore maybe requires a lot more work to get the application right.
Needless to say, today’s housing market with the very high purchase prices means that mortgage brokers who are winning this business are winning all the way to the bank. In the modern Internet era a large proportion of all new business comes from people searching on Google, and in this regard there are only a few of the larger mortgage broking companies that are really winning, as they have managed to get their company website onto page 1 of Google searches for keywords like ‘mortgage brokers Auckland‘.
It is expensive and difficult to get onto page 1 of Google, and the investment required can rollout all bar the largest mortgage broking companies. New business like this will be very lucrative for these companies, as the work for most clients will be pretty standard and straightforward, in may only require one or two hours work in total if the mortgage brokers in Wellington are suitably skilled and experienced. Most mortgage brokers freely admit that they could handle all the work that could be thrown at them, as they would simply take on additional staff with necessary, as the basic work is so lucrative.