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*** Yesterday the CBA strongly proposed to the Royal Commission that all home loan borrowers be legally required to pay $2,300 to Mortgage Brokers every time they want a home loan. The bank won’t pay the broker as they do now, instead you will. ***

Over the past 30 years, whether or not you have personally used a Mortgage Broker, by providing competition and promoting cheaper lenders, the Mortgage Broking industry has halved the profit margins of the Big 4 Banks, as this graph shows.

The outcome of interest rates returning to the pre-broker levels will be about $8,000 per year on an average home loan. So if you have a mortgage your repayments will go up, if you are a tenant your rent will go up.

The Big 4 regained some profits during the GFC when they were approved by Labor to buy the smaller lenders such as St George Bank, Aussie, Rams and BankWest but the popularity of brokers again pushed their profit margins (that you pay) back down.

Currently around 53% of borrowers use a broker and around 65% of first home buyers do. No one has to use a broker, they choose to because it suits them. Every year more borrowers choose a broker over their bank.

Yet the Royal Commission is being told by the CBA and Westpac that brokers are bad for borrowers.

No, but we are just bad for bank profits. Why would more and more borrowers freely choose a broker if it wasn’t in their best interests?

If this happens it will mean borrowers will be forced back to their bank manager and brokers won’t be viable anymore.

Then the Big 4 will be able to restore their profit margins to what they had before brokers. That means higher interest rates for everyone.

The only thing that keeps the banks even slightly honest is fair competition. They are trying to trick the Royal Commission into getting rid of that competition for them.

If this happens, the outcome of the Royal Commission will be the complete opposite of what was meant to happen. More power and less competition for the Big 4 Banks and higher profits at all our expense.

The banks have already raised interest rates and reduced people’s borrowing capacity, using the Royal Commission as their excuse.

It is lower income families and first home buyers who will be most hurt by this.

At this stage the Liberals have shown they understand this blatant attempt at profiteering by the banks and to twist the Royal Commission into their favour but Labor does not.