The big four banks’ share of broker-originated home loans is declining, with borrowers increasingly looking to smaller lenders to obtain finance, according to Mortgage Choice CEO Susan Mitchell.
In an address to shareholders at Mortgage Choice’s 2018 annual general meeting (AGM), CEO Susan Mitchell noted the shift in demand away from the major banks, based on the flow of settlements originated by the franchise group’s broker network.
Ms Mitchell said that in the 2018 financial year (FY18), the share of residential settlements submitted by Mortgage Choice’s broker network to the big four banks dropped to 42 per cent.
The brokerage CEO attributed the shift to changes in lending standards off the back of regulatory scrutiny of the industry.
“Market share was lost to smaller banks and niche lenders. If I were to include St. George and Bankwest, we still saw a fall in the major lenders from 62 per cent to 57 per cent,” Ms Mitchell said.
“Lending criteria has tightened at the majors, allowing increased opportunities for smaller lenders and niche players.”
Ms Mitchell added that while major bank market share is falling in the midst of tighter credit policies, demand for brokers is increasing.
“[The] demand for the services of a broker remains strong, with 53.9 per cent of loans originated by mortgage brokers,” the CEO said.
“As credit policy tightens and rapidly changes, brokers provide in-depth knowledge in a complex world.
“The broking industry helps drive down interest rates, creates better outcomes for consumers and provides vital competition, which is important for the structure of our banking system.”
Ms Mitchell continued: “The broking industry provides financial education and price discovery to the consumer and provides them choice of lender and an experienced helping hand working through a difficult, time-consuming process.
“This results in strong levels of customer satisfaction, with more than 90 per cent of home buyers saying they are happy with their mortgage broker.”
[Related: Mortgage Choice appoints new CFO]