Mortgage brokers dominate home loans, but are borrowers getting the best deal?

• Mortgage brokers now arrange a record 81.6 per cent of Australian home loans, up from about half a decade ago.

• Brokers typically compare loans from a limited panel of lenders and receive commissions based on the size and duration of a mortgage.

• Research suggests broker customers feel more confident about their loans but often understand less about them than borrowers who deal directly with lenders.

Australians are becoming increasingly reliant on mortgage brokers for home loans. Brokers arranged a record 81.6% of all new and refinanced home loans in the latest June 2026 figures – up from 50.1% in June 2016.

An industry-commissioned report, released in late September, found mortgage brokers arranged 838,815 residential home loans in 2025. That was up 122,800 loans, or 17.2%, on the year before.

The national body representing Australia’s 24,000 mortgage brokers says we’re now one of just three countries, along with the United Kingdom and the Netherlands, where mortgage brokers facilitate more than 80% of mortgages.

What’s behind this rapid change in our home loan habits? And do you always need a broker for a competitive home loan deal – or is it possible to do it yourself?

‘Home loans are confusing’

In 2024, my colleagues and I published a study on the impact of mortgage broker use on borrowers’ understanding of home loans. It was based on surveys of more than 3,000 Australians in 2019 and 2023, along with small focus group interviews.

As one home buyer from a Parramatta focus group told us: “Home loans are confusing, that’s why I use a broker”.

Banks were not seen as particularly trustworthy. Some people did see big banks as safer to borrow from. But some also found them inflexible, unhelpful and expensive.

Our study found more people who took a home loan through a broker were confident they had chosen the best loan, compared to those who’d dealt directly with a home lender. Yet we also discovered people who used brokers actually ended up with less understanding of home loans than those who’d dealt with a lender themselves.

It suggests one downside of Australia’s growing reliance on brokers: the potential impact on financial literacy about borrowing we’ll be paying off for decades.

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Broader drivers of change

If you do want to talk to a home lender in person, it’s not always easy.

A 2024 parliamentary inquiry into bank closures heard that more than 2,100 bank branches closed in Australia between 2017 and 2023. That was almost 40% of metropolitan branches and about 35% of regional branches.

Another possible reason why more home owners have sought help with their loans: the past decade’s interest rate roller coaster.

Rates fell to extraordinary lows during COVID, then headed up, then down last year. The Reserve Bank has hiked rates four times already this year, with another possible rise to come in early November.

At 4.6%, the official cash rate is at its highest level since 2011. However, average mortgages have doubled in size within that period – meaning there’s more pressure on today’s home borrowers to find lower rates.

The ‘best interest’ test

Following the Hayne Royal Commission, rules have been in place since mid-2021 that licensed mortgage brokers must do more than just find a suitable loan for a client. They must now meet a higher standard: to act in a client’s “best interest”.

That “best interest” duty includes offering several options to clients, and ensuring a client understands what the options mean for them.

In a July speech, a commissioner from the Australian Securities and Investments Commission, Alan Kirkland, emphasised mortgage brokers’ responsibility to educate clients – including explaining their reasons for recommending particular options.

As we saw in our study, this hasn’t always been done effectively.

Brokers don’t compare all lenders

A broker will typically present a borrower with three loan options.

But brokers do not compare every option or every lender on your behalf. Instead, the loan options they offer you will come from a platform called an “aggregator”.

Aggregators are loan wholesalers. They offer a catalogue of loans to brokers in return for a cut of the commission the lender pays a broker, once the loan’s finalised.

A 2023-24 industry survey found that brokers are accredited with
an average of 23 lenders through their aggregator, out of more than 100 home lenders nationally.

What you need to know about broker commissions

Brokers are paid a percentage of the value of the loan when it’s settled and then an ongoing fee:

• about 0.7% of the borrowed amount, upfront
• then an ongoing “trail commission”, about 0.15% of the outstanding value of the loan.

For a 25-year mortgage, that’s a declining – but potentially very long – payment stream.

In other words, brokers get paid more for larger and longer-lasting loans.

So brokers can have incentives to direct borrowers towards high commission loan products, which are larger and take longer to repay.

That doesn’t mean brokers will necessarily recommend you a loan that pays them the highest commission. The majority of their work comes from repeat customers (44%) and referrals (28%), so keeping clients happy is crucial.

But it’s worth understanding how broker commissions work, so you can make more informed choices about the size and length of your loan.

Could you get a loan yourself?

Competition among lenders is particularly fierce at the moment, thanks to falling demand for mortgages.

And even the biggest banks have become more reliant on brokers to win new customers.

But some – led by the Commonwealth Bank – are trying to sign up more customers directly, as it saves them money on broker fees.

If you want to apply directly to a lender, it’s easier if you’re in a secure, well-paid job, have a good credit history, and don’t have major debts.

However, people with unusual credit histories, or those with less certain income, may be seen as less attractive borrowers. Mortgage brokers can sometimes help more marginal customers’ loan applications get across the line.

This article is republished from The Conversation under a Creative Commons licence. Read the original article