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Brokers flock to mutuals as big bank sentiment sours

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James Mitchell 6 minute read

A handful of Australia’s mutual lenders have seen a significant increase in demand from the broker channel as sentiment towards the major banks turns sour.

The Adviser, in partnership with MSA National, held its Mutual Roundtable in Sydney earlier this month where four customer-owned mortgage providers discussed their third-party strategies.

Teachers Mutual Bank’s national manager of broker distribution, Mark Middleton, said that the bank had seen a “big influx” of broker clients looking for alternatives in the last few months.

“Traditionally, the brokers out there have probably looked at the big four and their subsidiaries, and when they have tightened that policy up, they haven’t had anywhere to go,” Mr Middleton said.


“As an alternative, they have had to go and seek accreditation and start looking at what else is out there . . . which has been beneficial and seen flow come through to ourselves and other mutuals,” he said.

“Aggregators are also starting to encourage more mutuals onto their panels. They don’t want to be seen as wedded to the big four. They want to provide more alternatives.”

However, Bank Australia head of third-party distribution Richard Irving added that, while the demand for mutual bank products is high, they are ultimately limited by how many brokers they can work with.

“One of the challenges for mutual banks is that we have to manage our limits from a regulatory perspective, just like the bigger banks do. Our communication with brokers has to be clear, and we need to set those expectations early,” Mr Irving said.

“Bank Australia is on four aggregator groups. [Although] we are on a list of aggregators that want us on their panel, we won’t do another one this year on the basis that we want to service the four that we’ve got and do a really good job of building that trust.”


The latest AFG Competition Index shows that Bank Australia has grown its share of broker-originated loans significantly since June 2016.

Fellow mutual lenders Beyond Bank, Firefighters Mutual Bank, Heritage Bank, Newcastle Permanent, P&N Bank, QBank and Teachers Mutual Bank have all seen flow from AFG brokers over the last few months.

The mutuals are now clearly benefitting from an increased appetite among borrowers to consider alternatives to the big four. Non-major lenders have picked a significant share of broker-originated loans at the expense of the major banks.

In May, 34.95 per cent of all mortgages lodged by AFG brokers went to the non-majors. AFG’s Mark Hewitt said that this is in “stark comparison to the 17 per cent market share of the non-majors outside of our channel”.

[Related: 'Deliberate strategy': majors lose broker loans]

Brokers flock to mutuals as big bank sentiment sours
increase demand
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increase demand
James Mitchell

James Mitchell

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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