The number of mortgage brokers writing commercial loans has hit a new high, with the value of commercial loans settled by mortgage brokers coming in at just under $9 billion, according to new MFAA data.
The Mortgage & Finance Association of Australia (MFAA) has released its latest Industry Intelligence Service Report (IIS) 9th edition, detailing broker and industry performance and demographic data for the six-month period of 1 April 2019 to 30 September 2019.
Compiled by CoreLogic business Comparator, the report draws on data supplied by 13 aggregator brands.
The latest edition shows that mortgage brokers are increasingly turning to commercial business, with the number of mortgage brokers also writing commercial loans through their aggregator panel having increased to a new high of 3,670 brokers in the six months to September 2019.
Year-on-year, this represented an increase of 53 brokers or 1.47 per cent and equates to 22.1 per cent of the mortgage broker population that operate under the 13 aggregators included in the report.
Compared to the previous six-month period, there were 189 more mortgage brokers writing commercial loans, or 5.43 per cent.
“The uplift in broker numbers writing commercial lending suggests that in a challenging home loan market, more brokers are turning to diversifying into this sector, expanding their portfolio beyond just residential home loans into other growth sectors,” the report reads.
Moreover, the report shows that the value of settled commercial lending also rebounded to reach its second highest value, at just under $9 billion ($8.99 billion) in the April to September 2019 reporting period.
This builds on a trend noted in the prior comparative period, when the value of commercial loans settled by brokers in the six-month period exceeded $9 billion for the first time.
The total book value of commercial lending for mortgage brokers continues to grow, reaching a record high of $43.1 billion, while the rate of growth appears to be stabilising.
Period-on-period, the commercial book value has increased by $1.5 billion or 3.61 per cent, year-on-year the value has increased by $3.03 billion or 7.57 per cent.
Value of resi loans drops
As well as noting the increase in the number of brokers writing commercial loans, the MFAA IIS report shows that the broker channel settled $86.37 billion in residential home loans for the six-month period, the lowest six-month value recorded since the MFAA commenced reporting in 2015.
This represents a decline of $11.5 billion, or 11.8 per cent, in new loan settlements compared with the same period last year.
Moreover, when looking at the year to September 2019, brokers settled just under $178 billion in home loans – a reduction of $20.1 billion, the largest decline observed in year-on-year levels since September 2015.
“The effects of the downturn in the housing market during this period, combined with more aggressive competition from the proprietary channel, were likely key contributing factors in the decline of broker-originated new lending observed over the six months covered in this report,” the report reads.
Year-on-year, the number of loan applications declined by 3.42 per cent overall.
MFAA CEO Mike Felton particularly noted that the share of broker-originated lending settled by the major banks dropped to a record low figure of 42.8 per cent during the September 2019 quarter and the segment of lenders other than the major banks and their affiliates recorded a record-high market share of 38.5 per cent.
“This clearly shows the systemic importance of the broker channel, which continues to offer choice, access to credit, drive competition and moderate the dominance of the major lenders”, he said.
[Related: Broker market share bounces back]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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