While the New Zealand mortgage broker market is dominated by a few large companies, where the work is farmed out to the individual mortgage brokers in the company, the vast majority of mortgage brokers in Hawke’s Bay operate out of small businesses and must find their own clients.
The career is not for the faint hearted, as the brokers will need to work continuously to make certain they have new clients lined up at all times, as the only way for independent brokers to get paid as by commission once the loan has been paid out to the client. This means that all of the work that the broker does (including finding new clients, providing the professional advice and assistance, negotiating on their behalf for a good mortgage which will also include developing the application to the required level and then following up with the bank) is not paid for until the very end of the project.
These independent brokers need to pay close attention to their cash flow, and in most cases these brokers operate out of their family home. The problem that all brokers have was that only a proportion of the applicants for loans who come to them will end up qualifying for the mortgage so what, and it looks like the proportion is generally around about 30%. This means that 70% of the potential clients that brokers will talk to will not qualify, and therefore it is important that the broker can identify these clients as quickly as possible in the process so they don’t waste any effort.
At the same time the broker needs to think in the long term, and there will be a bunch of the clients in the 70% group who may qualify down the track if they follow the professional advice given to them by the broker such as rearranging their finances or finding some sort of interim paid employment. In these cases the broker will not want to discard the client but instead put them on bring up as eventually the client will be able to qualify for a mortgage, and the broker will want to make sure that they are the person providing that mortgage.
While the small handful of large mortgage broking companies will find new business piling in through the door simply because of either their reputation or because of their very high ranking in Google searches, most of the remaining mortgage brokers in Bay of Plenty will have to go through the process on a daily basis of finding new clients and sifting and sorting them to find those that are most likely to succeed with their loan application. These independent mortgage brokers are an ideal target market for any service that can identify the clients that are most likely to succeed, and then forward these leads to the mortgage broker in real time. Such a service is correctly deployed and properly scaled could be somewhat disruptive in this market.