In celebration of its 10th anniversary, The Adviser looks back on a decade that moulded the mortgage broking industry into the powerhouse it is today.
IT’S HARD to believe that 10 years have passed since the first edition of The Adviser was published. The third-party channel has seen its fair share of challenges since then. Change has been consistent and growth — particularly market share — has been the one constant. Back in 2007, mortgage brokers were responsible for under 40 per cent of mortgages. Today they have the lion’s share at 53 per cent. All signs suggest that this momentum will continue.
Almost 10 years on from the global financial crisis (GFC), a historic event that wreaked havoc on most economies, it’s quite remarkable to consider the growth in Australian mortgages over that time. Back in December 2006, the home loan market was worth $820 billion of outstanding lending. A decade later it has effectively doubled to $1.62 trillion.
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Strong housing markets, rising loan values and a quarter century of uninterrupted economic growth have been blessings for the broker industry. Today mortgage brokers are the channel of choice for Australian borrowers.
Each potential headwind, every major change, from the introduction of NCCP to APRA’s investor lending crackdown, has created opportunities. In 2017, the broker proposition has never been stronger.
Of course, not everyone will agree. Sentiment among brokers has typically veered towards the negative whenever a big change is on the horizon. Right now, it’s the reviews by ASIC and Stephen Sedgwick into broker remuneration that has everyone talking. Fear and anxiety, confusion and angst are all being felt by the pessimists. The optimists are busy planning their next move.
“Any change in any industry causes unrest — as was the case in 2008 with the NCCP recommendations,” Aussie Home Loans CEO James Symond says. “There are certainly similarities emerging here today. At the time, some people were concerned, but actually the changes were appropriate, well-considered and drove better customer outcomes.”
There has been plenty of noise generated by the ASIC and Sedgwick reviews (the latter in particular). Pessimists will look upon these with dismay and tell you the world is about to collapse. Optimists see the silver lining. Deloitte financial services partner James Hickey is one of them. “If we look at the ASIC review, the key positive to come out of it was that there is no smoking gun in the broker industry,” Mr Hickey says.
“There is no fundamentally broken advice model and no clear evidence of bad customer outcomes. Both reviews found that, which I think is a clear vote of confidence in the industry and the current delivery model to customers. That was a real positive and put to bed any concerns that there was a systemic underlying issue out there.”
While the broker industry largely criticised Sedgwick’s final report, Mr Hickey believes it contains “powerful findings” that support not only the role brokers play in the marketplace, but also the significant part they play in fostering competition.
“If you were an external party looking at the mortgage market in Australia, where half of loans are written by brokers, and you are trying to look at mechanisms that could dramatically change that sector, neither review has identified those or suggested that they need to change.”
The Adviser has been supporting mortgage broking for a decade, charted its rise, and will be backing brokers for many more years to come. In this 10th anniversary special edition, we look back on the major events that shaped mortgage broking as we know it today.
From regulation to remuneration and fluctuations in the lending landscape, the third-party channel has emerged triumphant.
