Mortgage broking in New Zealand can be a very lucrative career choice for those people who are smart operators and work hard. The mortgage broker earns virtually all of their income by receiving commissions from the banks once a mortgage has been formalised, and in New Zealand the commission is generally around 0.65%. This means that for every million dollars of mortgages that a broker arrangements they will get paid around $6500.
In New Zealand the average house price is around $600,000, and assuming an average 20% deposit this translates to an average mortgage without $480,000, and an average commission of $3120. A broker would need to write only two average mortgages per month to earn around $75,000 per annum. Ironically for mortgage brokers in Northland the actual hours required to arrange mortgage are generally very light, and a well organised broker with good systems might spend no more than 3 to 5 hours in total in dealing with the client, arranging the paperwork and dealing with the bank.
Even at 5 hours work the effective hourly rate for the broker the $604, which is the sort of pay rate that only the most highly qualified legal or medical specialists can expect to receive. The problem for the mortgage brokers in Taranaki is that they need a steady stream of new clients in order to maximise the use of their time, and in fact most of the time is spent simply looking for new clients and new business.
Many brokers join one of the large franchises operating in New Zealand, and although they need to pay a significant proportion of their commission to the franchise owner they also received a lot more new clients and can earn a very significant income. For example a broker in a large city working for a major franchise owner was averaging over $200,000 per year income for the past 5 or 6 years.
The problem for these brokers is that the franchise owner generally lock them into a very tight contract that prevents them from doing any mortgage broking work for 2 years if they happen to leave the franchise. If they believe that they can actually do better on their own they are legally bound not to take the step.
Small independent brokers on the other hand have no such limitations, but unless they have ready access two referrals and repeat business they will be spending most of their time marketing themselves and searching for new clients. On average they only need to write two average mortgages per month to maintain a $75,000 annual income, and this might represent a total of 10 hours work for the clients.
Naturally these independent brokers would be very interested in a source of new clients, and if they were prepared to do a 40 hour week they could theoretically handle probably 8 clients per week.