National Australia Bank believes broker market share will continue to grow as customers increasingly value the third-party channel.
Anthony Waldron, NAB’s executive general manager of broker partnerships, told The Adviser that while there has been recent commentary about the value brokers provide, along with ongoing an ASIC inquiry into the industry, it is important to take a step back and look at the facts.
“Brokers must be building trust in their communities because you can’t build a referral business without trust, and we think that is a phenomenon that will continue to grow,” Mr Waldron said.
“Customers are choosing to come to brokers. Mortgage brokers accounted for approximately 25 per cent of flow in 2003 and now consistently make up over half of all mortgages originated in Australia. We expect this strong growth to continue to 60 per cent. The reason for this is because customers like the proposition and they like what brokers are doing.
“We have an inquiry going on into broker remuneration through ASIC. It’s going to be a hot topic. But we need to take a step back and look at what is actually happening with customers.”
Last November, NAB Broker and Genworth released a report that surveyed 1,000 consumers across two categories – those who intended to get a home loan in the next two years (either via a broker or direct) and those who had taken out a loan through a broker in the past two years.
The study found that the majority of broker applicants (65 per cent) would use a broker again for their next mortgage and 73 per cent would use the same broker.
Mr Waldron said that while educating the Australian consumer about the value of brokers can be done on a national scale, a community-based approach is far more effective.
“Most brokers are operating in their local community, they have become the trusted financial professional of their local communities,” he said.
“If you want to go back twenty or thirty years, that’s the position that branch managers had. Brokers have now filled that space. Yes, there can be more work done at the national level, but the reality is brokers are winning this game every day, they are winning it every day in their local communities, and it is the local communities that are referring them business and that are driving the growth of the industry.”
Commenting on the role of vertical integration and white-label lending in the context of an inquiry into broker remuneration, Mr Waldron stressed that brokers operate small businesses and ultimately can choose which aggregator they are with and which lenders they use.
“What you will find is that brokers are choosing lenders that meet a client’s needs,” he said.
“The value proposition of being able to shop around is incredibly valuable.”
NAB's broker partnerships include NAB Broker, Advantedge and aggregators PLAN Australia, Choice and FAST.
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