The national average value of a broker’s home loan portfolio is around $38 million, new research from the Mortgage & Finance Association of Australia has revealed, with Western Australian brokers having the highest value book.
Designed to create insights into the operations of brokers and provide benchmarking statistics for brokers, the third instalment of the MFAA’s Industry Intelligence Service (IIS) asked 14 aggregators (including AFG, Aussie, and Connective) to provide the association with data on their brokers (which collectively make up more than 95 per cent of the Australian broker market).
According to the data compiled by CoreLogic’s comparator business, in the six-month period 1 April 2016 to 30 September 2016, the average value of a home loan writer’s book in Australia was $38 million, however this ranged across the different states.
The report also found that the average gross up-front remuneration generated per broker per annum (for residential lending and prior costs) was $83,000, while the average trail was $59,500.
Mike Felton, the CEO of MFAA, said he hoped the report "motivates both businesses and individuals to discuss and question their existing business plans as a healthy exercise in quality business management".
Western Australia was found to be the state with the highest average portfolio balance per broker, with the average book size coming in at $48 million, a figure which the MFAA states is an indication of “the state’s supremacy and strong legacy in mortgage broking”.
In fact, Western Australian brokers delivered “solid growth” in the six-month period, noting an increase in new settlements of 5.5 per cent on the previous period, despite operating in one of the toughest home loan markets. On average, each broker in the western state lodged 24 applications for new loans, the highest in the country. The average value of new home loans settled per broker in Western Australia was $5.4 million.
According to the figures provided by aggregators, Western Australian brokers’ annual average combined up-front and trail remuneration (prior to costs) was around $143,098 – the fourth highest nationally.
Following Western Australia in loan book size was NSW and ACT (combined) brokers, whose average residential home loan book totalled $41 million at the end of the period.
Notably, the IIS found evidence of “quite high growth in the population of brokers” (around 5.5 per cent, bringing the total number to around 5,000 or 34 per cent of the national population of brokers), which coincided with a “mild contraction in the value of new home loan settlements by brokers” (down 4 per cent).
As such, the association noted that “more brokers are competing in a market that may be plateauing or even shrinking”, but are still operating in the largest single market for the third-party channel, with 40 per cent of all home loans coming through these two states (capturing $37.5 billion of settlements in six months).
The average value of new home loans settled per broker in NSW and ACT was just over $7.5 million.
Further, the MFAA noted that the average number of applications per broker during the six months was “well below” the national average of around 18 new loan applications per broker (ahead only of Tasmania (15) and Northern Territory (12)).
Unsurprisingly, brokers in NSW and ACT were found to be earning the most nationally, with the average gross annual earnings coming in just over $159,000.
Queensland and South Australia
Brokers in Queensland and South Australia were neck and neck in terms of book value, with both states recording an average value of $40 million for the six-month period ending September 2016.
Brokers in the sunshine state delivered a “very solid” 8.3 per cent growth rate in new settlements on the previous six months, outdone only by South Australia’s “very strong result” of 9.8 per cent. The South Australian figure was found to be its “highest quarterly value of settlements ever delivered in the September 2016 quarter”, totalling $5.1 billion.
The MFAA noted that brokers in Queensland had “staged a comeback” following a period of flat growth in the Queensland mortgage market, noting that they had settled $13.3 billion of new home loans (or 14.3 per cent of the national pool of settlements).
However, South Australia returned the highest number of new loan applications per broker in the six months, with 24 applications per broker.
Brokers in Queensland earned the third highest in the country for the period, with an average gross annual earning of $132,541 while brokers in South Australia took home an average of $129,335.
Despite having a strong market in Victoria, the average value of a broker’s resi book in the state was just under the $35 million mark, the third lowest in the country (behind Tasmania and Northern Territory).
New settlements grew by 1.7 per cent in the six months, with the value of broker-originated settlements ticking towards $26 billion.
Victorian brokers achieved around 20 new loan applications per broker during the six months, which was in-line with the national average.
Although Victorian brokers had the fourth-largest resi book, they had the second highest average gross annual earnings at $132,911.
Tasmania and Northern Territory
Brokers in Tasmania and the Northern Territory had the lowest value loan books, with an average of around $26 million and $31 million, respectively.
Tasmanian brokers also returned the highest growth in the value of settlements, settling just over $500 million (18 per cent more) in the six months, however the number of new loan applications lodged per broker was the second lowest (15), well below the national average of 21 applications per broker.
The average value of settlements per broker in Tasmania was the second lowest result for the six-month period at $4.6 million.
Unsurprisingly, the two states had the two lowest average gross annual earnings, with brokers earning an average of $100,125 in Tasmania and $82,481 in the Northern Territory.