Mortgage brokers now originate approximately 72% of new home loans in Australia — a figure that has risen steadily for a decade. This shift reflects a genuine structural advantage brokers have in accessing the market. But brokers are not neutral intermediaries. They are paid by the lenders they recommend, and that creates an incentive structure worth understanding before you hand over your financials.
Mortgage brokers in Australia receive an upfront commission from the lender when a loan settles — typically 0.50–0.65% of the loan amount — and a trail commission of 0.10–0.15% per annum on the outstanding balance for as long as the loan remains with that lender. On a $700,000 loan, the upfront commission is approximately $3,500–$4,550. The trail commission on that loan over five years is approximately $2,500–$3,500.
The borrower pays nothing directly. The lender pays the commission as a cost of origination. This does not mean the loan is free from bias, however. Not every lender pays the same commission rate, and brokers who consistently recommend higher-commission lenders create an obvious conflict. Post-Hayne Royal Commission reforms introduced Best Interests Duty (BID) in 2020, legally requiring mortgage brokers to act in the best interests of their clients and prioritise the consumer's interests when there is a conflict. Enforcement is via ASIC.
A broker's genuine advantage is panel access and cross-lender comparison. A good broker has access to 30–50 lenders including major banks, second-tier lenders, non-bank lenders, and credit unions. They can assess your specific financial profile (employment type, LVR, credit history, existing debt) against each lender's credit policy and serviceability calculator, and identify which lenders are most likely to approve you and at what rate. This is genuinely valuable and would take a borrower significant time to replicate independently.
Brokers also handle the application paperwork, coordinate with valuers, and manage the settlement process. For a complex application — self-employed income, unusual property type, multiple income sources — the broker's processing knowledge can be the difference between approval and rejection.
Banks retain a negotiating lever brokers cannot fully access: the existing customer relationship. If you are an existing customer with salary credited, accounts, and other products at the same bank, the bank has a stronger commercial incentive to retain you with a competitive rate on a new loan. Banks also sometimes have "proprietary" pricing not listed on their public rate cards — discretionary discounts offered by lenders' internal teams that are not available through broker channels.
Going direct also eliminates the commission layer entirely. While you do not pay the commission yourself, it is built into the lender's cost structure, which ultimately influences the rates they offer through that channel. Some borrowers find that negotiating directly with a bank — especially armed with competing offers from other lenders — produces a rate equal to or better than what a broker presents.
The most effective approach for most borrowers is to use a broker to get 2–3 written loan offers, then take the best offer to your existing bank and ask them to match or beat it. You are using the broker's work to create competitive pressure, then using your relationship leverage with your bank to extract a final concession. This takes more time but typically produces the best outcome.
Brokers are the better default choice when your situation is non-standard: self-employed income (particularly commission, variable, or trust income), a credit history with blemishes, an unusual property (small apartment, unusual construction, rural), or a complex purchase structure (trust, SMSF, multiple borrowers). These situations require lenders with specific credit policies, and a broker who works with these profiles regularly will know which lenders to approach. Going direct to a major bank with a non-standard application often results in a decline that then affects your credit file.
Broker quality varies significantly. The top brokers do extensive comparison and can articulate exactly why they recommend a specific lender over alternatives. Less diligent brokers default to lenders on their panel who have fast processing, high approval rates, or higher commissions. You can benchmark a broker by asking: "Can you show me the three cheapest rates you found for my profile, and explain why you're recommending this one over the others?" A good broker will answer this in detail. A poor one will generalise.
One practical advantage of using a broker: they submit one application to your chosen lender rather than multiple separate applications. Submitting multiple loan applications simultaneously creates multiple credit enquiries on your credit report, which can reduce your credit score temporarily. A broker assessing multiple lenders on your behalf does not require a formal credit application to each — they work from a single fact-find document and only formally apply once a lender is selected.
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