Mortgage Broking: Will the tax changes affect valuations?
New housing loan commitments fell 5.4% in the June 2026 quarter, following a 6.2% fall in the March quarter. However, the June figure was still broadly unchanged from the previous year, while the total value of new lending was 6.8% higher. This suggests a short-term slowdown rather than a complete collapse in lending activity. Ref: Australian Bureau of Statistics
At the same time, mortgage brokers achieved a record 81% share of Australian residential lending in the March 2026 quarter, with participating aggregators settling $124.88 billion—$25.51 billion more than the same quarter in 2025. This continuing shift toward the broker channel should help support demand for quality mortgage-broking businesses. Ref: Mortgage & Finance Association of Australia
The new negative gearing and capital gains tax changes could reduce some investor activity, particularly for established properties. However, they may also redirect investor demand toward new properties and create more demand for refinancing and strategic lending advice. The changes are scheduled to commence from 1 July 2027, with transitional arrangements applying. Ref: MFAA Federal Budget analysis
Importantly, these tax changes may affect the seller’s after-tax proceeds from selling a broking business, but they do not automatically reduce the business’s underlying market value. The MFAA has noted that mortgage-broking businesses may be particularly affected because much of their value comes from goodwill, client relationships and trail income rather than physical assets.
More established businesses are generally worth more when they can demonstrate:
- A stable and diversified trail commission income
- Consistent settlement volumes over several years
- Strong client retention and refinancing activity
- Reliable referral relationships
- Clean compliance and commission records
- Low reliance on one lender, referrer or individual broker
- Documented systems and an experienced team
- A client database with future lending potential
However, age alone does not create value. An older loan book may be declining because loans are being repaid, clients are ageing, or the business has stopped generating new settlements. A newer business with strong growth, recent clients, good referral arrangements and modern systems may therefore be worth more than an established but declining business.
Buyers may become more selective rather than simply reducing all valuation multiples. Strong, established businesses with sustainable trail income and continuing new business should continue to attract good prices. Businesses that depend mainly on investor lending, one referral source, or declining trail income may face greater scrutiny, more conservative valuations, and possibly longer payment or retention arrangements.
