Mortgage Choice shares plummeted more than 30 per cent after the broker warned recommendations in the banking royal commission would hand even more power to the big banks, making it harder to access credit and driving up interest rates.
Chief executive Susan Mitchell said Commissioner Kenneth Hayne’s recommendations needed to be ‘thought through carefully’ by decision makers and cautioned against the haphazard dumping of trailing commissions on Tuesday.
‘The proposed changes could have a large impact on the mortgage broking industry and therefore competition within the home lending sector,’ Ms Mitchell said in a statement.
‘Ultimately they could give more pricing power to the major banks which would lead to less choice, less access to credit and higher interest rates for consumers.’
Shares in the company fell as much as 32.3 per cent in early trade on Tuesday, dipping from $1.05 to 71 cents.
Mortgage Choice stocks are down nearly 70 per cent from $2.32 a year ago.
The Hayne royal commission report took aim at the industry, recommending it move from a commission-based pay structure to a to fee-based model in its report, which was released on Monday.
Under this proposal, borrowers would pay a fee rather than trailing commissions over the life of a home loan.
Ms Mitchell’s comments echo the concerns of others in the mortgage broking industry who reacted with fury to the report on Monday.
However, it’s not all bad news for the home loan broker which expects to only be minimally impacted by the recommendations made on financial advice, including the removal of grandfathered commissions.
The company says its model has no reliance on the commissions.