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Brokers responsible for 56% of major bank flows

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James Mitchell 3 minute read

Mortgage brokers have become the primary distribution channel for a major lender, whose CEO concedes that customers no longer want to visit branches.

ANZ this week released its full-year results for the 12 months to 30 September. Over the period, brokers originated 56 per cent of the group’s home loans, equivalent to 99,680 mortgages.

The third-party channel has become an increasingly important part of ANZ’s strategy as it focuses on retail banking in Australia and New Zealand.

The bulk of ANZ’s mortgage portfolio (51 per cent) is sourced through the third-party channel.

ANZ chief executive Shayne Elliott has been one of the more vocal supporters of the broker channel compared to his big four peers.

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Earlier this month, Mr Elliott appeared before a parliamentary committee in Canberra, where he gave his honest opinion about the bank’s branch network, the value of mortgage brokers and the problems associated with changing the way brokers are remunerated.

Mr Elliott then told the parliamentary committee that mortgage brokers are “a really important channel” for the group, one that customers are choosing to go to (unlike its branches).

“Australians increasingly choose to go to a broker, particularly when they’re looking for a home loan — in fact, it’s more than half the market today,” the chief said.

Asked why the major was closing branches, Mr Elliott said: “It is because our customers have already made the decision for us because they no longer come to the branch. The reality is, there is a role for branches, and we understand that — particularly in rural and regional areas. What we’ve found, though, is that customers aren’t coming to those branches anymore.”

Later, the CEO stressed the point: “Our customers don’t want to come into branches. They really don’t want to.”

In the 12 months to 30 September, the bank grew its retail business with an emphasis on owner‐occupied home lending. ANZ added 178,000 new mortgages to its portfolio over the year, 66 per cent of which were owner-occupied loans.

In Australia, ANZ has introduced First Home Buyer Coaches to help customers navigate the home buying process. First home buyers make up 7 per cent of the group’s mortgage portfolio.

Mr Elliott said that while household debt has increased, the ability for households to withstand economic shocks “has diminished a little”. As a result, the bank is keeping a close eye on its mortgage portfolio.

“It’s a big exposure for any bank so we watch it like a hawk,” the CEO said. “I mean... we look at the data literally on a daily basis to try and understand, you know. It’s in our interest to make sure that our customers borrow responsibly and so we do look at that.

“Household debt levels are high. They’re higher than they have been in both Australia and New Zealand. And they’re reasonably high on an international basis.

“There’s some good reasons why that’s okay, but we don’t want to be complacent about it. So, I think we get paid to be cautious and to be prudent. That’s the nature of banking.”

In December, the ANZ chief will begin his term as chair of the Australian Bankers’ Association (ABA).

[Related: Will brokers have the ABA in their corner?]

Brokers responsible for 56% of major bank flows
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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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