A new survey has found that 70 per cent of brokers have experienced an increase in the number of clients requesting loan options from a smaller bank.
The latest MyState Bank survey of its national broker network, completed in last week of July, found that of these brokers, half said that they had noticed a “significant” or “reasonable” increase in requests for home loans from smaller banks.
The survey followed public hearings by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
At the same time as brokers were seeing customers move away from large banks, the brokers themselves said that they would follow suit over the next year and broker more home loans from smaller and regional banks.
More than four-fifths of the respondent brokers (83 per cent) said that they would “definitely” or “probably” broker more home loans from smaller and regional banks in the next 12 months while 16 per cent said “maybe”.
Just 2 per cent were confident they would make no change.
When asked why, 46 per cent of respondents said that smaller banks had their interests aligned with brokers and were more committed to providing a high level of service.
Just over 28 per cent said it was because smaller banks were now just as competitive as larger banks, while 17 per cent said that larger banks needed to be kept on their toes and using smaller banks as well as large ones helped to achieve this.
Only 4 per cent of surveyed brokers said that broking more loans from smaller banks was a risk management move, in case larger banks moved away from the broker channel.
MyState Bank group executive broker distribution Huw Bough said that the survey results showed the Australian mortgage market was dynamic and competitive and that mortgage customers were highly responsive.
“The results are encouraging for smaller regional banks like MyState Bank, which have historically operated at a funding disadvantage to larger banks. We will be monitoring this closely to see if a clear trend emerges,” Mr Bough said.
“What is clear is that technology has really opened up the mortgage market to smaller banks in recent years. Smaller lenders like MyState Bank do not need a large brick-and-mortar network to service the needs of customers.”
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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