Upfront commissions totalled almost $1.2 billion over the past year driven by a “strong urge amongst lenders to use the broker channel more and more”, an industry researcher has revealed.
Speaking to The Adviser, principal of Digital Finance Analytics Martin North explained that having tracked the mortgage industry for “more than 30 years”, his research shows continuous growth in broker commissions over time.
According Mr North it is now “the highest it’s ever been”, totalling almost $1.2 billion in the year to August 2016.
Mr North explained that, although tapering off around the GFC in 2009 and 2010, broker commission levels have been “coming back in the last few years”.
He noted that he believes broker market share will continue to “move north of 50 per cent”, in light of a “strong urge amongst lenders to use the mortgage broking channel more and more” and the positive consumer feedback garnered through his consumer surveys.
“I find that consumers are much happier about the experience of getting a loan via a broker than going directly to the banks,” said Mr North.
“They think they get better advice, more objective advice, and they think that as a result of that they get a better deal.
“So I think that consumers will continue to vote with their feet and, therefore, I think brokers will continue to see volumes of growth.”
Mr North explained to The Adviser that his research is based on a range of sources and data, including consumer surveys in which consumers are asked about their use of mortgage brokers, a survey of individual mortgage brokers and loan portfolio data from banks.
He elaborated that he also receives data regarding the latest movements in broker commissions from his contacts in the industry.
Together with the data he collects, Mr North explained that he “overlays the information in terms of loan growth” from RBA and ABS data.