🇦🇺Australia

Broker Commission Costs Eroding Bank Margins

1 verified sources

Definition

Big Four banks face margin pressure from broker commissions, prompting shift to in-house origination for higher returns amid lower interest rates and competition.

Key Findings

  • Financial Impact: 20-30% lower returns on broker-originated loans vs proprietary; combined Big Four earnings down 4.5% to AUD 30 billion in 2025 partly due to margin squeeze
  • Frequency: Per loan origination; ongoing for 67-80% broker-sourced mortgages
  • Root Cause: Broker commissions cutting into bank net interest margins (1.8% in 2025)

Why This Matters

The Pitch: Loan brokers drive 80% of AUD 1.6 trillion home loan market but banks lose 20-30% returns on commissions. Automation of lender matching reduces broker dependency and commission leakage.

Affected Stakeholders

Banks funding broker-originated loans, Loan brokers reliant on bank commissions

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Payroll Tax Liabilities for Sole Trader Brokers

AUD $68,000 per sole trader in liabilities including 5 years back taxes; potential $100,000 extra mortgage costs passed to borrowers over loan life

Broker Fee Disclosure Non-Compliance Penalties

AUD 2,210 - 50,000+ civil penalty per contravention; potential licence suspension leading to revenue loss.

Manual Disclosure Preparation Overhead

10-20 hours per loan application at AUD 100/hour = AUD 1,000-2,000 opportunity cost per deal

Lost Deals from Disclosure Delays

5-10% deal churn at AUD 5,000 avg broker commission per loan = AUD 250-500 lost revenue per 10 deals

Verzögerte Provisionsauszahlung durch fehlerhafte oder verspätete Settlement‑Koordination

Quantified: 10 extra manual hours per loan (14h vs 4h) × AUD 60 effective hourly cost ≈ AUD 600 inefficiency per loan; at 10 loans/month ≈ AUD 6,000/month (AUD 72,000/year) in internal capacity tied up. Plus ~AUD 3,900 upfront commission lost for each loan that fails to settle due to poor coordination, typically 1–2% of files ≈ AUD 4,000–8,000 per broker per year.

Übermäßiger manueller Aufwand bei Settlement‑Koordination und Funding‑Verifikation

Quantified: 10 avoidable hours per loan × AUD 60/hour internal cost = AUD 600 extra capacity cost per loan; at 10 loans/month = AUD 6,000/month or AUD 72,000/year per broker team.

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