Contrary to industry expectations, the MFAA has reported a decline in the number of commercial loans written by mortgage brokers.
The Mortgage & Finance Association of Australia (MFAA) has released the eighth edition of its Industry Intelligence Service (IIS) report, which assesses trends in the broking industry by analysing data from 12 of the country’s major aggregators.
The research revealed that in the six months from October 2018 to March 2019, the total value of commercial loans settled by mortgage brokers slipped by 1.6 per cent from $8.94 billion in the previous corresponding period to $8.79 billion.
NSW/ACT and South Australia were the only states to record an increase, up 0.5 per cent to $3.47 billion and 8.8 per cent to $378.2 million, respectively.
In contrast, declines were recorded in Victoria (0.4 per cent to $2.5 billion), Queensland (1.3 per cent to $1.49 billion) and Western Australia (9.5 per cent to $815.2 million).
The drop in the total value of commercial loans settled by mortgage brokers coincided with a reduction in the number of commercial loan writers over the same period, down 5 per cent, from 3,668 to 3,481.
The decline was evident across all states, with Queensland reporting the sharpest decline (9.5 per cent), followed by Western Australia (8.8 per cent), South Australia (6.3 per cent), Victoria (3.7 per cent) and NSW (2.4 per cent).
According to the MFAA, the results defied expectations of an increase in commercial loan writing in light of subdued activity in the residential mortgage space over the same period.
“These results are contrary to what one would have anticipated in the current environment where residential mortgage volumes are under pressure,” the MFAA report stated.
“One would have anticipated an increase in commercial diversification, not a decrease.”
As a result of the shift, the number of mortgage brokers writing commercial loans as a proportion of the overall network dropped from 21.8 per cent as at March 2018 to 20.7 per cent.
[Related: Broker commissions slide to historic low]
Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining Momentum Media as a journalist in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.