The valuation of mortgage trail books has surged to historic highs in 2025. What was once a stable asset class has undergone a massive re-rating, creating a significant wealth creation event for established brokers.
Valuation multiples that were traditionally in the 1.5x - 2.0x range have escalated to 2.75x to 3.75x annual trail for high-quality residential books. This shift represents a fundamental change in how the market views the stability and longevity of trail income.
| Client Demographic | Valuation (2025) | Trend | Reasoning |
|---|---|---|---|
| Mortgage Clients (Residential) |
2.75x - 3.75x | ↑ Strong Rise | Considered "bond-like" stable income; low refinance risk due to serviceability buffers. |
| Young Clients (<55 years) |
2.5x - 3.2x | ↑ Rise | Longer lifetime value; potential for future cross-sell and upgrades. |
| Investment / Super | 2.2x - 3.5x | ↑ Rise | High funds under management (FUM) and sticky relationships. |
| Older Clients (61+ years) |
1.2x - 1.8x | ↔ Stable | Higher risk of loan discharge due to downsizing or estate realization. |
Several factors are driving this inflation, creating a perfect storm for sellers:
To achieve the upper end of the valuation range (3.5x+), brokers must transition from selling a "trail book" (a depleting asset) to selling a "brokerage" (a going concern).
Documented processes for lead intake, settlement, and review make the business transferable and scalable.
A book reliant solely on the owner's network is risky. Established partners (accountants, agents) command a premium.
Buyers scrutinize run-off rates. Automated retention programs (e.g., fixed-rate alerts) prove sustainability.
Brokers considering an exit should start planning 2-5 years in advance to "groom" the book. This involves cleaning CRM data, normalizing financials, and reducing owner dependency to maximize the sale price.
The market has shifted, and the opportunity for wealth creation is real. Don't leave your exit strategy to chance.
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