Over 95 per cent of mortgage brokers are expecting to write more home loans for non-major lenders, according to a new survey.
According to a MyState survey of its broker network, more than 95 per cent of mortgage brokers responded positively when asked if they expect to write more loans for products offered by smaller banks.
Of the 95 per cent, almost half (46 per cent) of broker respondents said “yes, definitely”, 23 per cent responded “yes, probably” and 26 per cent voted “yes, possibly”.
Only 4 per cent of surveyed brokers voted “no, I doubt it” and less than 1 per cent responded “no, I will broker less home loans from smaller and regional banks”.
When asked why they voted yes, 35 per cent noted that smaller banks are now just as competitive as larger banks, 34 per cent made reference to service levels, 21 per cent noted the importance of maintaining competition with big banks, 7 per cent cited customer preferences for loans from smaller lenders, and 3 per cent said they were managing risk in the event that major banks moved away from the broker channel.
Reflecting on the survey results, MyState Bank’s group executive of broker distribution, Huw Bough, said: “The survey results are encouraging for smaller regional banks like MyState Bank which have historically operated at a funding disadvantage to larger banks.”
Mr Bough added that the industry would be awaiting the outcome of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, claiming that it could encourage more borrowers to consider the services of smaller lenders.
Further, Mr Bough noted the role that technology has played in facilitating the growth in non-major market share.
“Technology has really opened up the mortgage market to smaller lenders in recent years, as the need for a branch network is no longer a necessity. Smaller lenders like MyState Bank can now offer mortgage products with all the features of the products offered by our larger counterparts,” the executive said.
The MyState executive also highlighted the importance of the broker channel in driving competition among lenders.
“Being a smaller bank, we are reliant on the broker channel for distribution. We have a very clear focus on its importance and the value brokers bring customers through providing greater choice and competition. Having this clarity makes it easier to move from relationships to partnerships,” Mr Bough said.
[Related: Brokers unfazed by rise in online players]