Brokers to ramp up home loan dominance: Lendi, Athena

Looking to the future, David Hyman of Lendi Group projected that brokers would increasingly dominate loan originations in Australia.

“We strongly believe customers will continue to demand choice. Today, six in 10 loans are written by a mortgage broker, and that’s grown from 30 to 40 per cent when we started the business eight years ago,” he stated.

“And we see that trend continuing.”

However, Athena Home Loans co-founder and CEO Nathan Walsh forecast that the direct digital channel will snatch a larger share of the market, although he said he believes brokers will retain the majority.

Mr Walsh predicted that in the next 15 years, 30 per cent of home loans would be originated online, shifting from the current 3 per cent.

“Brokers are the majority of the market today, and I think that’s there for a reason. There’s a lot of value that customers have in terms of helping people make choices around understanding the options out there and helping them through that process. And we don’t see that changing,” he said.

“What I do think is the case, though, is there are a lot of scenarios where – if you’re doing a simple, like-for-like refinance, if you’re familiar with the process – I think there is a real comfort for consumers going direct and doing things digitally.

“So, we do see the shift, moving towards taking advantage of the simplicity of these channels, the access to data and those components and that’s whether that’s a migration towards a digital broking business, as per David’s business or whether that’s a direct-to-lender.”

Meanwhile, Mr Hyman pointed to opportunities for Australian brokers, focusing on simplifying the lending process for consumers.

He contrasted the Australian mortgage scene, with its strong broker presence and deposit-backed funding, against the more fragmented lending market in the US.

“I guess what that means, from a customer’s perspective, is there’s a whole lot more complexity in terms of the setting [in Australia],” Mr Hyman said.

“Where should I go? Which lender is going to accept my credit profile?... There’s a lot less standardisation around the underwriting process,” he said.

Australian lenders have an opportunity to streamline the loan writing process, the Lendi Group CEO added, to refine the digital experience and to deliver certainty. Brokers may have a similar opening with technology.

“What a typical offline broker is doing is they’re really wading through that complexity from a customer’s perspective and extracting that away from the customer,” he said.

“And the opportunity with technology there is to ultimately take those things that the broker will do and break it down into parts in your technology platform, to ultimately put the power back in the hands of the consumer, but allow them to lean on an expert, whether that be a broker or a team member should they wish to.”

The CEO also flagged that he expects more mergers to come in the broking industry, noting Lendi’s wrapped acquisition of Aussie in May.

Reflecting on brokers, Mr Hyman said: “There are 17,000 of them. It’s an incredibly fragmented market, and we see more consolidation happening.”

Indeed, major consolidation has already taken place this year, with several large aggregation companies merging together.

Earlier this year, Loan Market Group acquired PLAN Australia, Choice and FAST, while REA’s acquisition of Mortgage Choice recently received court approval (and is expected to complete on 1 July).

Moves are also still underway to merge AFG and Connective via the proposed $120-million deal. 

[Related: 2021: The year of aggregation consolidation?]