‘Interest rate gap’ sending broker volumes to non-majors

by Malavika Santhebennur•05:45 AM, 19 Nov 2019•10 minute read

Mortgage brokers are increasingly choosing non-major banks, with a survey showing that four in 10 brokers have written more than half of all home loans with non-major and regional banks over the past 12 months.

The MyState broker survey also revealed that of brokers who noted an increase in the percentage of home loans secured with non-major and regional banks, one in five said this had increased substantially compared with the previous year.

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Two-thirds of brokers cited a strong broker service proposition as the main reason for the rising demand for mortgages from non-major and regional banks.

More than half of brokers (53 per cent) said the movement towards non-majors and regional banks could be attributed to the closing interest rate gap, with smaller banks perceived in the market as just as competitive as major banks on the rates front.

More than a quarter (27 per cent) said their customers did not want to take out a loan with a big four bank.

The survey of 341 brokers also found that one-tenth were working with a broader range of lenders to spread risk in case major banks decided to move away from the broker channel.

Commenting on the survey, MyState general manager, banking, Tony MacRae said: “Challenger banks rely on the independent broker channel for growth and have recently upped their game when it comes to servicing the needs of brokers and customers.”

“We expect challenger banks to further chip away at major banks’ market share as a result of shifting demand from brokers and borrowers.”

The non-major bank also surveyed mortgage brokers that settled loans in the last six months about how likely they were to recommend MyState Bank to a customer. Of the brokers surveyed, MyState Bank scored +56.

Brokers also scored MyState Bank a high net promoter score of +77 when asked how likely they were to recommend their broker relationship manager to a colleague or another broker.

[Related: Broker sentiment on the rise]