Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Brokers burned by customer-driven channel conflict

loan application  loan application
James Mitchell 5 minute read

Home loan conversion rates are plummeting as borrowers attempt to secure a mortgage by making multiple applications across different channels, new research has found.

Data from Digital Finance Analytics (DFA) shows that in recent months, the number of mortgage applications which are made, but which do not lead to a funded loan, is on the rise.

Back in 2015, the ratio was around 80 per cent. Now it has dropped to around 50 per cent.

DFA principal Martin North said that the data, which is based on 52,000 Australian households, shows that more multiple applications are being made to a portfolio of lenders in an attempt to get a single approved loan.

Advertisement
Advertisement

“Essentially, they are backing both horses,” Mr North explained. “They are talking to brokers and potentially putting applications in via brokers but also putting applications in themselves.

“It is creating a lot of noise in the system. That means there is a much lower probability of an application a broker is handling translating into a funded loan.”

The analyst believes that a number of factors are contributing to the rise in multiple mortgage applications being made by the same client across different channels. The ease of applying for a mortgage online, driven by comparison websites and digital platforms that enable a DIY approach, is believed to be a major factor.

In addition, Mr North points out that consumers understand that credit has become tighter following the introduction of macro-prudential measures.

“They understand that the hurdles are higher now,” the principal said. “They don’t necessarily trust one channel over another, but they will try this portfolio approach and see what turns up. The fact that the processes are far simpler now than they used to be is making it easier.”

PROMOTED CONTENT


The DFA data shows that younger borrowers under the age of 40 are making multiple applications more than any other age groups. Mr North said that this is not surprising, given their digital literacy.

He believes that the findings shift the conversation about mortgage channels and pose significant challenges for banks and brokers.

“I bet nobody asks whether the borrower currently has a mortgage application in the system,” Mr North said. “Perhaps, that’s a questions banks and brokers need to start asking.”

[Related: Channel conflict ‘biggest issue’ for veteran broker]

Brokers burned by customer-driven channel conflict
loan application
TheAdviser logo

loan application
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.

 

 

more from the adviser
Sam White 3 Loan Market to move forward with MyCRM

The major brokerage has chosen MyCRM as its broker platform, but ...

ASIC TA ACL obligations issued for debt management firms

ASIC will require debt management firms to hold a credit licence...

handshake 2 NAB exec to head up mutual bank

A member-owned bank has announced that it has appointed a new CEO...

FROM THE WEB