National mortgage broker cuts staff
Tuesday, June 24, 2008/
Signs are emerging that the credit squeeze is starting to hit mortgage brokers following revelations that a national mortgage broker has cut almost a quarter of its staff.
Perth-based mortgage broking chain Australian Finance Group has revealed it cut 40 staff in April and shut down its mortgage warehouse facility, The Australian Financial Review reports.
A succession of banks have announced cuts to the commissions they pay mortgage brokers to sell their products over the past year. Combined with a drop-off in borrowing due to higher interest rates, many mortgage brokers are now feeling the squeeze.
AFG has been one of the first mortgage brokers to publicly discuss the steps it has taken to respond to the tough conditions, but it is likely many other businesses have or will be forced to take similar steps.
AFG executive director Malcolm Watkins says the number of mortgage brokers operating across the country could fall by 40% over the next 12 months.
“There are many newly formed or small to mid-sized aggregators which have not achieved significant enough scale, infrastructure or financial reserves to weather this mini ice age, and we anticipate a good chunk of these will collapse or disintegrate as the brokers underneath them leave the industry or migrate to the larger more established businesses over the next 12 months,” Watkins told the paper.
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