Mortgage Brokers in a Market Downturn


Hannah Lu, mortgage broker

In any property market downturn only the very best real estate agents cruise through unworried, with everyone else being forced to tighten their belts and in many cases for the less successful agents forced to take on another job meant time.

The same is very true for the mortgage broking sector, especially in New Zealand right at the moment where there is a very definite flattening of the market. The tightening of the bank lending rules by the government and the reserve bank there’s finally kicked in properly and done the job that it was supposed to do which is to stop the incessant rise of house prices in the larger centres. The banks are obliged to limit their lending to residential customers with a 20% deposit, although first home buyers with a relatively low income may qualify for a loan with a 10% deposit. Property investors are even harder hit as they need to have a 40% deposit for every new property they purchase.

Many mortgage brokers serving the property investment market will still probably be ok, as some will have regular clientele who have high net worth and are experienced investors and so are not caught out by the current borrowing restrictions. These clients will instead see the flattening of the market is a unique buying opportunity, and so will probably be even more active than usual.

For the vast majority of mortgage brokers any downturn in sales creates cash flow difficulties for them, and they will have to work even harder to win new business while at the same time tightening their belt. There will be some exceptions however, including those brokers high on the pecking order in a handful of very large mortgage broking companies that are always at the top of every Google search for a mortgage broker. These companies generally get so much business flowing in through the door from the Internet that they can weather any storm. Normally they will prescreen any callers to make certain that they only accept clients who are slam dunks, but in tight times they can expand their acceptance criteria. Visit for more information.

For the large number of independent brokers vet find a web site nowhere near page 1 and Google searches, belt tightening will be essential as well as making absolutely certain that they provide brilliant service to a new client, see a future depends wholly on referrals and repeat business. For Hastings mortgage brokers click this link.

New Business for Mortgage Brokers


Mortgage broking can be a very lucrative career, as the commissions paid by banks at 0.65% bear almost no resemblance to the actual amount of physical work required for the broker to arrange that mortgage. For any broker the amount of work required for a $100,000 mortgage can be the same as a $1,000,000 mortgage, but the commission will be 10 times more for the latter.

Samantha Matel, mortgage broker

For a well organised broker with good systems and a good administrative team or capability, the total amount of work may involve no more than 2 hours, especially if they deal entirely by telephone and Internet with their client. Hence a $1,000,000 mortgage that generates a commission of $6,500 can produce the equivalent hourly rate of $3,200.

For a favoured broker in a large mortgage broking firm, this can make them very wealthy if they are fed most of the high value clients.

The independent broker will be very unlikely to be picking up $1,000,000 clients regularly, and while they may get the occasional very lucrative payday most of their time will be spent on making sure they have new business coming in through the door. For these mortgage brokers Wanganui the most reliable strategy for new business is to build and maintain extensive networks with real estate agents and builders and developers and banks to make certain that they get a regular supply of referrals and repeat business.

This can be an excellent career for those people that enjoy this type of networking, but it can be hard work and it can result and lean times and a boom and bust experience. For these brokers every new viable client they get is to be worshipped because they may be generating their only income for that week.

The brokers working in the large companies generally don’t have to worry about chasing new business because the company will feed it to them. The large companies are generally heavily invested in promoting their brand and their business, and in 2017 are particularly careful to make sure that the company website is ranking in the top one or two of all Google searches. It is unfair but a fact that 95% of Internet search business goes to companies that pop up on page 1, and 30% of all Internet search business goes to the company that occupies the number one slot. The return on investment for heavily investing in a top website and top SEO is massive if the company ends up in the top three of Google search, as from that point they pretty much do not need to be worrying about winning anymore new business. It will simply be flooding in through the door, and all they have to do pre-screen for dreamers and hopeless cases and then pass the leads on to their mortgage brokers Wairarapa.

First Home Buyers in New Zealand


New Zealand has some of the most expensive residential property markets in the developed world, and this has been so for well over a decade now. Worst case of this is in the largest city in the country, but the problem was also serious in the other main centres and one or two provincial centres.

Hannah Torinet, professional mortgage broker

The real problem is that house building has not kept up with demand for many years now, and what houses are available for sale are being competed for by cashed-up investors and wealthy homeowners. This has caused the houses in these markets to be simply unaffordable for the vast majority of first home buyers.

The problem has been tinkered with by successive governments and the reserve bank, but the fundamental problem of too much demand for insufficient houses is still very much embedded in New Zealand. The banks and mortgage brokers Waikato have been complicit in this problem in the sense that they have aided the funding of the escalating housing market. If borrowing conditions had been much tighter over the past decade then this would have suppressed the demand somewhat and kept prices lower.

Instead the population has steadily increased, largely due to immigration enabled by compliant government policies, and house prices have continued to rise due to the shortage of houses and the ready availability of finance enabled by banks and mortgage brokers.

For mortgage brokers in Wellington this has been a very good period because as finance becomes tighter and banks requirements become more onerous then more people require a mortgage broker to help them through the minefield of an application. Worryingly the average mortgage now for the first time buyer is probably 3 times what it was 20 years ago, but the average salary in NZ is only about 50% higher, and a whole generation of new home owners are struggling under a massive amount of mortgage debt. This presents a real problem for the new government which intends to build a massive number of new affordable homes over the next 10 years. The very last thing they would want to do is to flood the market and help to drive down property prices, as this would most likely cause a large number of home owners to go into negative equity. This would be catastrophic for them and for the New Zealand economy.

Mortgage brokers in New Zealand


Around 40% of the customers obtaining mortgages New Zealand use mortgage broker to achieve this. The remaining 60% go directly to their bank for other financier, but the banks are very happy to pay a commission to mortgage brokers Waikato because the brokers perform such a valuable service.

Jamal Smith, professional mortgage broker

The reason why most people use a mortgage broker is because there’s something because process is so difficult to navigate for the average person, and they use a broker also to make absolutely certain they are getting the best deal on the market. Mortgage brokers like Jamal Smith, pictured right, almost all come from within the banking industry, and they have excellent and deep experience with how the banks operate and what their requirements are, and using this experience the brokers are in a position to prevent their clients do the banks in the best possible light.

The brokers often solve a number of problems for the banks particularly around pre screening many applicants for a mortgage, and providing professional advice to the customer on what mortgages and payments are appropriate for their particular situation. The brokers are prepared to put quite a lot of work into each customer because they are well rewarded especially in this current period of expensive houses and high mortgages. Brokers generally turn around 0.65% commission from the banks once the loan has been advanced, which floor a $200,000 mortgage translates into $1,300 for a few hours work. Most brokers will have a set of quality systems and processes which means that the actual effort they personally need to do will be minimised once they have concluded discussions with the customer.

Mortgage brokers Westland who work for a large firms more generally have a steady supply of leads coming in the door, and while this means a steady workflow and a steady income they will also be required to make high payments to the broking companies franchise owner. The work can also be somewhat repetitive, especially as the large broken firms tend to filter out any potential clients that look a bit difficult.

Independent mortgage brokers have a somewhat different situation in that they will most certainly will not have leads streaming in through the door, and instead will have to devote a large proportion of their time to find a new business. Fortunately the commission structure for the industry is generous which means that the brokers do not need to be working right of mortgages for every hour every day, and in reality they could spend 20% of their time writing mortgages and still have a very high incme.