A major aggregator has said that it is “no wonder” that brokers’ share of the home loan market is now 53 per cent, given increased regulatory intervention driving a boom in individual products.
Further, AFG's growing number of brokers on the books is expected to lead to higher settlement growth in the future. AFG today (25 August) announced its 2017 financial year results, posting a normalised net profit after tax of $30.2 million, reflecting an increase of 33 per cent on FY16.
Speaking on the results, AFG said that due to an increase in regulatory intervention in the market, AFG had seen the number of individual products available in its software grow from 1,450 in April 2015 to more than 3,400.
David Bailey, AFG CEO, added: “Another indication of the complexity is that visits to AFG's BrokerHQ knowledge base, which is what our brokers use to assess and understand the market at a greater and in-depth level, has increased from around 28,000 a month in 2015 to over 53,000 currently.
“Most of these new products we are seeing in the market are a consequence of regulatory changes impacting the lenders.”
AFG noted that the increased number of products were driven by splits in products along owner-occupied, investment, interest-only, principal and interest and loan-to-value ratio band lines.
As such, the need for brokers with the “systems, skills and expertise to help consumers navigate” the shifting landscape has been growing more prevalent.
The number of brokers with AFG has grown from 2,650 at 30 June 2016 to 2,875, and AFG brokers are currently sending 35 per cent of flow to non-majors, up from 29 per cent in 4Q16.
Thirty per cent of brokers are currently operating in Victoria, while 26 per cent are operating in New South Wales, 21 per cent in Queensland, 18 per cent in Western Australia and 5 per cent in South Australia.
Mr Bailey said: “Victoria and New South Wales have both experienced strong growth [in broker numbers] and places us in good stead for the year ahead.”
He added: “We do believe it takes awhile for those [new to AFG] brokers to find their feet and start to grow. So we've recruited in the right areas in terms of the major markets in Victoria and New South Wales, [and] we expect to have some settlement growth in those markets.
“The level of complexity in the marketplace should drive people to brokers, but [there will be an] overlying factor around that, that would be in terms of credit growth and lender appetite, in terms of new products and their desire to grow their own books.”
AFG reported a settlement growth increase of 1 per cent in FY17, with a residential settlement value of $34.3 billion and a commercial settlement value of $2.8 billion.