Australian MORTGAGE brokers are being forced out of the industry because of shrinking market share as well as reduced brokerage commissions being paid by the major lenders.
The departure of so many mortgage brokers has raised concerns that the big four banks are tightening their grip on the mortgage industry and this in turn will lessen competition for home lending.
The market share of non-bank lenders shrank to 6.8 per cent by December 2008, from 21.2 per cent of lending commitments to owner occupiers in July 2007, which was just before the global financial began.
As the global financial crisis escalated, total home lending commitments fell by almost 15 per cent last year in Australia, from $264 billion in 2007 to $225 billion in 2008.
The fall in lending commitments during 2008 put upfront commission under pressure, with the major banks significantly cutting their mortgage broker fees.
Westpac was the first of the major banks to reduce mortgage broker commissions, announcing drastic cuts to both upfront and trail commissions in April 2008 as the effects of the global financial crisis became clearer.
St George, Commonwealth bank of Australia and NAB followed suit in May 2008, introducing lower commissions for brokers unless specific performance targets were met, while ANZ revised its commission structure in June last year.