After years of growth broker numbers look set to fall as tough market conditions and commissions restructuring bite.
According to a recent Mortgage Business straw poll straw 89 per cent of respondents expected to see broker numbers drop as a result of commission cuts.
Kevin Frost, eChoice’s head of aggregation, said if all lenders took a similar approach to Westpac the industry could expect a “significant exit of brokers” from the market.
“However if more lenders took a strategic and less dramatic approach, such as St George, exits shouldn’t be too considerable,” he said.
Phil Naylor, CEO of the MFAA, pointed to a general movement towards a lower number of brokers, regardless of broker commissions.
“There are a number of factors – including regulation – that are going to change the appearance of the broker channel.”
Naylor was not prepared to comment on how much it could shrink.
“The general belief though is that this will be good for the broker channel and is supported by many in the industry.”
Despite contraction in the broker market, the industry remains up-beat.
Alison Whittle, managing director of brokerage The Mortgage Detective, said that while there will be attrition to broker numbers, those that remain will prosper.
“For those brokers set up well enough to weather the coming months, opportunity should arise in the form of improved market share due to decreased broker numbers,” Ms Whittle said.
As well as an increase to their share of the market, National Mortgage Brokers’ managing director Gerald Foley said that borrower demand for brokers should also rise.
“The industry needs to remember that the whole value proposition a broker offers a borrower has not changed at all,” he said.
“Borrowers still need brokers and will continue to need them more as lenders and products continue to develop and change in a multitude of ways,” he said.
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