A Little Bit of History


25 years ago mortgage brokers didn't exist, and yet today over 35% of Australians use a mortgage broker like Victoria Finance to find the right loan.

Before the Australian lending market was deregulated in 1984 the four big banks were the only real source of loans. If you wanted to borrow it was on their terms, at their rate. But with deregulation came competition. Foreign banks, credit unions and finance companies entered the market, forcing rates to become more competitive and fees and charges to be reduced. Competition also saw lenders introduce an increasing range of innovative new loan options.

With this choice of lenders and loans, borrowers stood to save tens of thousands of dollars over the life of the loan. Mortgage brokers soon emerged to help borrowers find the right loan, however with so many conflicting and confusing options it became very hard to work out which broker was best.

Adding to the problem, banks (and other lenders) quickly realised the best way to secure business was to offer brokers an incentive to recommend their products. So whilst the clients thought they were getting unbiased advice they were really being forced into loans that suited the broker rather than the borrower.

As the market grew ethical brokers began to pool their resources, experience and lenders with other brokers. With their combined panel of lenders their customers once again had real choice. The brokers also changed the way they were paid, taking away all incentive to recommend one loan package over another.

Today the majority of mortgage brokers operate in this ethical way. They have access to the same pool of lenders, the same tools and the same techniques. However there is still a vast amount of difference between brokers. With so many options, so many loan variations and structures, and an ever increasing amount of new loan products it is vitally important to choose the right broker who will best understand and respond to your individual needs.

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Victoria Finance Pty Ltd. 261 Salmon Street, Port Melbourne, VIC 3207
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