Brokers are paying top dollar for quality books, but a major correction could be approaching
As the managing director of TrailBlazer Finance, Australia’s largest trail book marketplace and specialist funder, Jeff Zulman has an enviable corpus of broking industry data to draw from.
Zulman and his team recently conducted a thorough analysis of 300 trail book valuations and 40 trail book sales over the past three financial years to get an understanding of what’s shaping the market.
MPA therefore caught up with Zulman at TrailBlazer’s Bondi Junction office to quiz him on his thoughts on the current state of trail book valuations, and where he expects to see the industry go next.
His insights are a powerful tool for brokers looking to acquire or sell a trail book, although one fact became startlingly clear throughout this discussion – no two trail books are the same, thus no two trail books should command the same price tag.
Yet as a relatively nascent marketplace, a lack of sophistication persists among buyers and sellers and the unprepared could find themselves stung if and when the market turns against their favour.
The trail book bull market
Trail book values have without a doubt been going up, for the very simple reason that loan values have been going up, for the even simpler reason that property prices have been going up.
Brokers writing 10 vanilla loans a month since 2023 have therefore seen their businesses grow in the double digits, thanks to the natural flow of the underlying market
Or in Zulman’.s words, “the industry is getting pumped up on somebody else's juice”.
Zulman draws attention to this, not to trivialise the hard work brokers do for their clients, but to stress the fact that gravy trains have a tendency to run out of fuel (gravy?) at some point.
“What happens once property prices flatline or go down?” says Zulman. Sure, the housing market was on a tear in 2025, but signs are already pointing to a cooling in 2026, especially if fears of the Reserve Bank of Australia (RBA) hiking rates again start to materialise.
The broking industry, for its part, appears entirely unfazed by these mounting headwinds. The proof is in the current state of trail book valuations.
Valuing a book – ‘seasoning’
There are many complex factors that go into valuing a broker’s trail book.
Zulman discusses the concept of a trail book’s “seasoning”, which relates to the stickiness of a mortgage at different stages (or seasons) of its life.
Take a standard 30-year mortgage.
In the first two years, a mortgage is at high risk of being refinanced away from the broker’s book, with all the clawback pains that come with it.
Older loans, on the other hand, begin to provide diminishing returns as more of the principal gets paid down. To put it bluntly, trail books are a wasting asset – if they are not consistently replenished, they will keep dropping in value.
The optimal age for a loan is between 24 to 60 months old, says Zulman. “It's got old enough to be sticky, but not too old to have started going down the curve.”
Understanding seasoning is critical in assessing a loan book’s value.
Valuing a trail book – refinancing and clawbacks
Refinancing activity can be a good indicator of the stickiness of a broker’s loan book.
Zulman witnessed the highest level of refinancing since starting Trailblazer 15 years ago in the 2024 financial year, with around a quarter of all loans switching funders.
While interest rate cuts played a significant factor here, another more controversial aspect was at play – lucrative refinancing incentives. Major banks were tossing around $4,000 cashbacks like candy, enticing borrowers to refinance and giving brokers a way of pocketing an easy upfront commission.
Automation and digitisation made the process easier than ever, but it was a short-sighted tactic by the banks that caused a significant decline in brand loyalty; an act of self-cannibalisation as each bank tried to one-up the other in order to attract customers.
This caused a massive spike in the clawback rate in 2024 to 10.11%, up from 7.53% in the previous year, which set off alarm bells for Zulman.
Concurrently, the average loan balance run-off rate surged above 25.5% in the financial year 2024, before climbing back below 23% in 2025. The run-off rate represents the percentage of a loan book that is paid off before maturity. It is heavily influenced by refinancing activity.
Typically, a clawback rate of 5% or less is a sign of a healthy book, while between 5% and 10% is a sliding scale of good to average. Something above 15%, meanwhile, indicates something is not healthy and concerns about churn and client’s best interest emerge.
Credit: The Finance Broking Intelligence Report, TrailBlazer Finance
The trend increase abated in the financial year 2025, with the clawback rate edging up to 10.15%. While still in the cautionary zone, brokers have historically eaten well from these unsustainable pickings.
Credit: The Finance Broking Intelligence Report, TrailBlazer Finance
“We've had one of the best runs of brokers earning commissions in years,” says Zulman. “They're getting bigger and bigger market share. They've got property prices pumped up, banks throwing incentives, but it's like everything – autumn follows summer, and winter follows that.
“I'm starting to see that the cautionary winds are blowing… if this was a stock market, I'd say market's got a bit overheated.”
Paying a premium
Yet brokers seeking expansion are still paying a premium to acquire a quality loan book.
On the basis of an independent valuation determined by an actuary, Zulman reckons the median valuation multiple on a trail book is currently 2.39-times, up from 2.3-times in financial year 2024. In other words, 2.39-times the annual earnings of a trail book can be a considered fair value on the book.
Credit: The Finance Broking Intelligence Report, TrailBlazer Finance
But the market is paying a premium right now, with buyers paying an average of nearly three-times annual earnings and many paying more – often for books of questionable quality.
Credit: The Finance Broking Intelligence Report, TrailBlazer Finance
“This gap shows you the supply-demand imbalance. People are aggressively trying to buy mortgage books,” says Zulman.
But why? It comes down to how brokers are fundamentally growing their businesses in an age of increasing competition and rising costs.
“You either compete like crazy and have to build a book loan by loan, or you buy somebody else down the road,” says Zulman. Brokers may be paying a premium to acquire a trail book, but they’re betting it will pay off in time and keep them in the game.
A stock market analyst would call this a bull market. It’s a bet that the broking is in rude health and will continue to grow
in the near-to-mid future.
The fact that Zulman is seeing six or seven buyers for every book that Trailblazer puts up for sale is further proof of a bull market.
It is similar to how traders are willing to buy Nvidia stock at a substantial premium (upwards of 50-times earnings at the latest count) because they believe Nvidia is the number-one trade on the artificial intelligence revolution.
It could all be a severe miscalculation, of course.
Anyone who invested in Beyond Meat in early 2021 expecting plant-based burgers to be the future of food are instead dining on 99% share price losses today.
Pandemic-era Peloton investors are facing similar losses after society realised exercising outside is actually quite nice.
All markets are unpredictable and many investors get burnt because they fail to adequately read the tea leaves.
True, comparing mortgages and the stock market is not an apples-for-apples scenario, but the fact still stands – if you pay too much of a premium on any investment, it becomes harder and harder to earn it back, especially if the bull market starts looking less bullish.
“When some seismic event occurs, interest rates or regulation change, then anything that's overvalued suddenly corrects downwards,” warns Zulman (pictured, right).
To reiterate – the unprepared risk being stung if and when this happens.
Educating the masses
Brokers ultimately buy books at premiums because they believe they can do a better job than what is currently being done.
Zulman sees his job as providing the adequate knowledge so a buyer can make an informed decision.
Some key tips for brokers emerged from TrailBlazer’s research. These included:
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Focus on growing your average loan balance
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Minimise your run-off rate to enhance your book’s stability and appeal
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Minimise arrears and clawback rates
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Stay informed about current valuation and sale multiples to benchmark your trail book effectively
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Monitor market demand indicators, such as bids and enquiries to time your sale strategically
