New figures from the prudential regulator have revealed that mortgage brokers are now originating the majority of residential mortgages for Australia’s non-major banks.
APRA statistics on ADI property exposure for the December 2016 quarter, released this week, show that third-party originated loans approved by non-major banks totalled $9.1 billion over the December quarter, accounting for 52.5 per cent of total non-major bank lending.
This is a significant increased from a year earlier, when brokers wrote 46.4 per cent of non-major bank mortgages over the December 2015 quarter.
Meanwhile, broker share of major bank home loans remains relatively steady at 47.3 per cent (47.4 per cent over the December 2015 quarter).
Australia’s largest mortgage provider, CBA, actually saw a 4 per cent drop in broker market share over the six months to December 2016.
The drop led to an uptick in the proportion of loans coming through the proprietary, which accounted for 54 per cent of new business loans in the six months to December 2016 (up from 52 per cent in the same period in 2015).
Proprietary channels a ‘strategic priority’ for CBA
When asked by The Adviser whether the bank was moving away from the broker channel, CEO Ian Narev said: “Our view for a while and certainly going back to the time when we made our investment in Aussie Home Loans is the broker network provides a really important proposition that customers like and want. We don’t see it as going away. We see it's good for a lot of customers and it has a role and therefore we see continuing to partner with brokers as a critical part of the group strategy.
“That said, our preference is always going to be, as you can imagine — for all sorts of reasons — to service as many of our customers through our own channels as we possibly can. That's a strategic priority for us.”
Mr Narev told The Adviser that the increase was attributable to the fact that the bank had “upgraded and put more lenders in the branches — people who are able to have lending specific conversations with customers”.
He added: “We've been able to provide more analytics to support those lenders and others in the branch and we’ve really invested in the branch proposition and as a result of that we've seen our own share of the proprietary channel go up at the time when the markets have gone down — so for us that is a pretty good outcome.”
Non-bank grow broker numbers
Leading non-bank lender Pepper this week revealed that it had grown its broker numbers by 25 per cent over the 2016 calendar year from 2100 to 2630.
According to the group’s financial results for the 12 months ending 31 December 2016, the surge in mortgage broker numbers has helped the company deliver a record level of new originations for Australian residential mortgages in the calendar year, coming in at $2.53 billion, or 36 per cent more than the year before.
Speaking of the results, Pepper’s co-group chief executive officer, Patrick Tuttle, said: “The reason for our record originations and above system growth in Australia is simply because more consumers and brokers are recognising the competitiveness and breadth of Pepper’s mortgage product range, and our position as one of the country’s leading non-bank lenders.”
[Related: Mortgage giant to grow broker numbers by 40%]
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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