A group of new-to-industry brokers has found a key point of difference by specialising in an area of lending most brokers have typically ignored.
Vow Financial’s head of commercial and leasing Glenn Mitchell has recently seen a surge in the number of new-to-industry brokers leaving the banks to focus on commercial lending.
Mr Mitchell spent five years at PLAN Australia, setting up the aggregator’s commercial lending operations before joining Vow in 2014. He said most of the large aggregators would be seeing between 10 to 15 per cent of their business coming from commercial lending.
However, with the new breed of brokers hungry for these types of deals, he expects the third-party channel to account for half of all commercial lending business in the coming years.
“A few years ago, you would have been looking at 10 to 15 per cent of brokers taking the commercial and asset finance space,” Mr Mitchell told The Adviser.
“Today, it would be in excess of 30 per cent without any problems at all. Most of the majors are predicting that it will be like residential, with brokers writing 50 per cent of commercial deals. It’s being driven by the new players coming in.”
Mr Mitchell said if the growth of commercial lending was left up to more established mortgage professionals, it was unlikely broker market share would grow beyond 30 per cent. More than likely, he said, it would start to plateau.
“But that’s not what I’m seeing in the market. The new guys are skilled up and looking to do more than residential loans.”
The new brokers coming into the industry have various backgrounds, Mr Mitchell said. Two things they have in common, however, are a good education and an eagerness to use their existing skills or acquire new skills to write sizeable commercial deals.
“Some have come out of corporate banking and are quite savvy and like doing financial analysis. The new breed coming through is certainly the way forward for growth,” Mr Mitchell said.
“I think the new brokers are more educated. I can think of three that have joined us from a bank recently. They are very driven and can see where the opportunities are in the marketplace.”
While those who leave the banks to become brokers may lose their regular salaries, the opportunities they are finding in the commercial lending space have made the change worthwhile.
“If they look long term, they could retire a lot earlier if they can build a nice book,” Mr Mitchell said.
“You are talking about a lot larger loan size in this market. The availability of funds is better. Every day I am getting inquiries from different lenders coming into the market who want a share of it.”
This year, Vow Financial held its commercial conference on 9 and 10 June at the Sheraton Grand Mirage Resort on the Gold Coast.
The aggregator’s event featured a new agenda packed with panel sessions, broker success stories and the latest insights from a range of lenders looking to ramp up their share of the commercial market through the third-party channel.
Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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