Shares in non-bank mortgage broking firms have surged Friday after the federal Labor Opposition announced its formal response to the royal commission final report.
Mortgage Choice rallied 12.42 per cent to $0.86 a share, while fellow broker network AFG was up 5.93 per cent to $1.25 after being hammered in recent weeks.
Having previously suggested – prior to the report’s release – that it would implement all of Royal Commissioner Kenneth Hayne’s recommendations, Labor has now revealed that it will act “in full” on 75 of the 76 recommendations, while watering down the inquiry’s controversial stance on mortgage broker remuneration.
“Labor has listened to experts including the Productivity Commission and the Governor of the Reserve Bank of Australia, and we recognise that moving to a customer-pays model in mortgage broking poses real risks to competition in the banking sector,” Opposition leader Bill Shorten told media today.
Treasurer Josh Frydenberg – who has also raised issues with the royal commission’s recommendation to outlaw broker commissions – criticised his counterpart as backing down on this policy front, saying it shows Labor can’t be trusted.
Tomorrow will be humiliating for @Bowenchris & @ClareONeilMP as they backflip on mortgage brokers. This after @Bowenchris said “If the Royal Commission recommends it, it shall be done” & @ClareONeilMP said they “will implement every single recommendation”.
— Josh Frydenberg (@JoshFrydenberg) February 21, 2019
Representatives of the mortgage broking industry have been lobbying hard in Canberra and via social media against the proposal, arguing a commissions ban would just hand more market share to the big banks.
Some market analysts agree.
Speaking to TICKY about the mortgage broker rally on Friday, Matthew Kidman from Centennial Asset Management said the news was welcome.
“It makes sense,” Kidman said. “What the royal commission recommended [on mortgage brokers] was a bit strange.”
Your Money journalists also reflected on whether mortgage brokers had been unfairly singled out by the royal commission final report, just minutes after the document was made public earlier this month.
Watch Kidman’s discussion on TICKY in the video above and Your Money presenters dissecting the mortgage broker commission debate in the video below.