Mortgage brokers form a key part of Australia’s property market — a mortgage broker will broker the finance on a loan required to purchase a property. By sourcing multiple loan options from lenders and banks, mortgage broking services offer greater convenience, comparisons, and ultimately, better loan terms for home buyers and investors.
It’s no secret that those in the property industry tend to do well financially. So, how much does a mortgage broker actually earn, and how do they earn it? It may surprise you to know that the salary for mortgage brokers isn’t fixed as with other real estate occupations — in fact, the salary for a mortgage broker can vary greatly depending on who you ask, and the business model that they work under.
What is the average mortgage broker’s salary in Australia?
As of December 2024, the average annual salary for a mortgage broker in Australia is between $90,000 and $110,000 per year, according to SEEK. Similar to real estate agents, the average earnings of a mortgage broker will usually depend on their experience, location, and earning structure. This is usually the base salary and it is a common practice to have incentives on top of this. It could be an additional between $20k to $100k+ depending on many factors. It takes time to build up commissions as brokers gets more established in the industry and build relationships.
How do mortgage brokers earn money?
Most mortgage brokers will earn based on the loans they broker. Some will work for a company or a brokerage firm where they may earn a salary, but most will either work independently or earn commissions on top of their salary.
If a broker is experienced in the industry, the bulk of a mortgage broker’s earnings comes from the commissions they earn through writing loans on behalf of clients. For a new broker, the base is the bulk of their wage for many years. There are two main types of commissions that mortgage brokers earn – a commission that is paid upfront upon the first signing of a loan, and a trail commission that is earned periodically over the course of the loan.
Upfront commissions
An upfront commission will be paid by the bank or lender to a mortgage broker upon signing a new client who takes out a loan. An upfront commission is paid as a percentage of the loan amount that is signed. According to the Australian Securities and Investments Commission (ASIC), the average upfront commission is 0.54%. This means that if a mortgage broker’s client takes out a loan of $700,000, that’s an upfront commission of $3,780.
However, if the client decides to switch to another lender within the first two years of the loan term, lenders may be able to reclaim some or even all of the upfront commission that was previously paid to the mortgage broker and trail commission will stop. So its important for brokers to maintain supportive, nurturing ongoing relationships with their clients well after settlement, to ensure that their hard work is accounted for and that their clients are happy with their services and support.
Trail commissions
Trail commissions are paid to mortgage brokers over the course of the loan term as borrowers make the required payments. Ongoing trail commissions serve as an incentive for mortgage brokers to refer clients who are more likely to stay with the lender throughout the course of the loan (as opposed to refinancing with another lender). Trail commission amounts are a percentage of the balance of the loan, meaning that the commissions gradually get smaller over time, as the loan is repaid.
How do trail commissions work?
Trail commissions will be a smaller percentage than a one-off upfront commission, but because they are paid throughout the loan term, they often end up forming a large portion of a mortgage broker’s remuneration, once a broker has been established in industry for a long time and built up their portfolio. Understanding this concept is especially important for those who are new to mortgage broking or those who are looking to get into the industry.
The amount of trail commission earned is always highest after the first year of the loan. Using the same example of a loan of $700,000 and the average trail commission rate of 0.15%, a mortgage broker can expect to receive a yearly trail commission of up to $1,050 in the first year.
Assuming that the client pays off $150,000 in the following year, the trail commission amount will be reduced to $825. This continues each year until the loan is completely paid off, or if the client refinances the loan with another lender.
Recent updates to commissions for mortgage brokers
One of the biggest risks for mortgage brokers is the clients who switch from one lender to another, for more favourable rates, terms or better service. This can significantly impact the commissions earned by a mortgage broker and has a major point of negotiation between the mortgage broking industry and banks in Australia.
As of September 2024, major banks in Australia such as NAB, Westpac, and Commonwealth Bank have reduced the amount of commission that they can claw back from mortgage brokers if and when a client switches lenders early on into the loan. Changes implemented by NAB now allow the bank to only reclaim 6% of the commission if the home loan is closed after 2 years, down from the previous clawback percentage of 50%.
This is good news for both seasoned and aspiring mortgage brokers — it translates to a lower financial consequence for situations where borrowers decide to make a switch for their home loan.
Is mortgage broking a high earning career path?
Australia’s Mortgage Brokers industry was estimated to be worth $4.7 billion in 2023. The industry is expected to grow at an annual rate of 6.6% through 2024-25, to a forecasted total $5.1 billion.
Aside from the lucrative value of the industry as a whole, there is also clear demand and opportunity for mortgage brokers in Australia — the Mortgage & Finance Association of Australia’s latest industry report shows brokers wrote almost 74% of all new home loans in the second quarter of 2024.
If you are looking to become a mortgage broker in Australia, the first step is to get the right qualifications. Each state in Australia has their own regulations and certification requirements for working as a mortgage broker, and it’s important to know what courses you need to complete in order to register and start working as one. There are also mortgage broker traineeship programs in New South Wales and South Australia, as well as tailored mortgage broking workshops that can equip learners with industry-specific skills.
As a registered training organisation, Entry Education provides the full range of courses for individuals to obtain the necessary skills and qualifications to become a successful mortgage broker in Australia. Explore our range of real estate courses in Sydney, Melbourne, Brisbane, and all other states in Australia.
