While the various forms of media have spent a lot of time dwelling on the global financial crisis, many people are ignoring the news and deciding that the time is right to enter the broker industry.  This seems to be a contradiction, so let's examine how and why this is occuring.

Over the last 6 months I have received something in the order of 5 times the normal number of inquiries from people who are interested in joining the industry.  That is a massive influx of new people into what the pundits are describing as an ailing industry. 

Various statistics tell us that maybe as many as 40% of Australian Mortgage Brokers have left the industry over the past 18 months. This can't be blamed solely on the world's financial crises.  There are many factors which have influenced this.

The first aspect to consider is the historical element.  Over the past 9 years Australia experienced a massive property boom.  At it's height, properties were lasting only minutes on the market, that's right, minutes, as cashed up buyers were actually on waiting lists for properties to become available.  Real Estate Agents in some areas had the frustrating experience of too many buyers and not enough properties.  And all of these people wanted to borrow more money.  Becoming a Mortgage Broker was very easy at that point, there was no Cert IV requirement and no licencing issues and so with very little effort, anybody could become a mortgage broker and most could find business.  The number of Mortgage Brokers in Australia almost doubled as people jumped into the industry.  Unfortunately, quite a few of these people, through either ignorance, poor customer skills or outright dishonesty, did not provide their customers with either the right products or service.

Now, as the markets get tougher, those who don't have a good service proposition or who haven't developed a solid customer base are now finding that their businesses are suffering.  There were many brokers who had a 'set and forget' mentality, which meant that once a customer was signed up, they would move on to the next prospect and stop returning the clients calls.  These cowboys have been the first to leave the industry.

The next group to leave are those who are unwilling or unable to satisfy the new industry and legal regulations.  There are many people who were accredited previously with only one or two lenders, particularly with Mortgage Managers, and these are now finding the new requirements simply too onerous.  Broadly included in this group of people are those who are becoming frustrated with the new hurdles being erected by lenders for new accreditations.

The final group of people who are exiting the industry are those who are worried about the financial climate and who are unwilling to risk staying in the market.  There are those who are frustrated by reduced or targeted commissions being applied by lenders.

There are a number of reasons why people are leaving, so why are so many new people keen to sign up?

For many existing financie professionals such as accountants and financial planners, the entry requirements to become a Mortgage Broker are still seen as relatively low.  We are seeing many individuals who are currently working in these related businesses, who are adding Broking to their portfolio as another service which they can offer to their clients as well as providing an additional income stream.

The reality is that while those in the industry may baulk at the increased regulation, the Mortgage Broking industry still remains one of the easiest and cheapest financial professions to start up in.  Unless you buy a franchise, a newcomer can enter the industry on a budget of under $5,000 and become fullly qualified in one month.  Compared to many other professions this is a breeze.  My daughter enrolled in a year long certificate IV course in graphic design while our industry offers fast track courses which are completed in a week.

Now that many of the lenders are diversifying their offerings to brokers, brokers can now branch out and offer life insurance, car insurance, deposit products and many more financial products while receiving upfront and trailing commissions.  Some of us who have been in the industry for a while still think of ourselves as Mortgage Brokers, whereas newer people to the industry are quickly realising that their businesses are much broader than that.

With a flexible lifestyle, cheap upfront costs and a wide range of products to offer, who wouldn't want to be a broker right now?

Once RAMs decided to pull out from the 100% loan market it was only a matter of days before St George announced the end of it's campaign as well.  The 9th of April is the last day for the submission of 100% home loans through St George and hence my blogging has been very limited as I have been contacting all of my potential clients and letting them know that they'll need to make a decision fairly quickly.  The next 9 days promise to be very busy as we submit all of our pre-approvals prior to the cutoff date.

The month of March was a very busy one for myself.  The volume of loan applications which I'm personally receiving has been steadily increasing and I am working closely with some of the brokers in our network to share these deals around.  I have asked for anyone who is interested in specialising to raise their hands and let us know their specialty in order to promote excellence in each field.  This has been working out very well so far with some of our individuals choosing to specialise in first home buyers, construction loans and car loans.

Anyway, it's back to work for me as I have more of my 100% loans to submit.  Only 9 days to go...