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Broker expectations strong despite market challenges

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Reporter 2 minute read

Softening market conditions and a tighter regulatory environment have not dampened the growth expectations of mortgage brokers, a new survey has revealed.

According to a MyState survey of 3,000 brokers, 90 per cent of respondents are expecting a further increase in the third-party channel’s share of the home loan market.

Of those expecting market share growth, 39 per cent predicted a rise from the current level (55.7 per cent) to 60 per cent, with 24 per cent expecting market share to increase to 65 per cent or above, and 15 per cent expecting brokers to originate more than 70 per cent of home loans.

Further, when asked how they expected their broking business to perform in the second half of 2018, over 70 per cent of respondents said they expected “strong” (19 per cent) or “moderate” (52 per cent) business growth, with no surveyed brokers expecting their business to perform at a loss.

Reflecting on the results, MyState Bank’s group executive of broker distribution, Huw Bough, said: “The positive outlook brokers have for their segment of the industry is encouraging for smaller regional banks like MyState Bank who have a strong mortgage broker focus.”

Respondents maintained a positive outlook despite over 90 per cent reporting that changes to lending practices, which require brokers to collect, verify and record more client information, had “significantly” (59 per cent) or “moderately” (32 per cent) increased the time and resources needed to do their jobs.

The survey also revealed that when assessing the prospects of online brokers, three-quarters of respondents said they believe that they would fail to capture any more than 15 per cent of the mortgage market, with 11 per cent  stating that online brokers could gain as much as 20 per cent of market share.

Moreover, the survey reported that over 40 per cent of brokers said that their current business model was robust and would not need to be adjusted to succeed, with 27 per cent stating that they were planning to adopt new technology and software to remain competitive.

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Brokers were also asked what processes, capabilities and skills were required to sustain a successful business, with faster application processing times cited by 35 per cent of brokers, superior relationship management skills cited by 26 per cent of respondents, and more automated digital systems that used artificial intelligence cited by 16 per cent of brokers.

[Related: More customers asking for smaller banks]

Broker expectations strong despite market challenges
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