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Changing the commissions paid to mortgage brokers would affect competition in the home loan market, Australia’s largest investment bank has warned.

Macquarie Group believes brokers play an important role in allowing lenders to compete against the big four banks.

It is concerned changing the payment structure, such as through requiring consumers rather than lenders to pay brokers, could affect the mortgage broker distribution channel and therefore competition.

Macquarie’s outgoing CEO Nicholas Moore said the group’s general point was one of caution that there could be unintended consequences of regulation.

‘We think, having regard to history, that the broker network does provide genuine competition, and that genuine competition has reduced the cost for all mortgages,’ Mr Moore told the banking royal commission on Thursday.

‘Our nervousness would be regulation could severely hamper that broker business.

‘So we’re providing a note of caution in terms of any thoughts about changing the regulatory structure, that people think broadly about what the implications may be.’

Macquarie is the eighth largest player in the mortgage market, which is dominated by the big four banks.

Macquarie said it introduced mortgage securitisation to the Australian market in the 1990s, enabling non-bank lenders to compete in the mortgage market.

That competition ultimately resulted in a 2.5 per cent reduction in interest rate spreads paid by consumers, it said in a submission to the royal commission.

While the big banks are large users of mortgage brokers, Macquarie said brokers and other intermediaries were particularly important to lenders like itself that did not have extensive branch networks.

Macquarie only has five branches, whereas the four big banks operate from hundreds of locations.

‘A decline in the intermediated distribution channel would increase the comparative advantage of the operators of those branch networks,’ Macquarie’s submission said.

Mr Moore, who retires at the end of the month, spent an hour in the witness box at the royal commission’s final hearing on policy issues.

It was the first time someone from the investment bank had been called before the inquiry.