The broker channel has hit new heights, recording its highest ever share of the home loan market.
According to the latest data released by research group comparator, a CoreLogic business, and commissioned by the Mortgage & Finance Association of Australia (MFAA), the share of broker originated loans approved in the three months ending 31 March 2019 increased to 59.7 per cent, up 4.4 percentage points when compared to the same quarter of 2018, and up 6.1 percentage points from the March quarter of 2017.
MFAA CEO Mike Felton said the result— which is based on the value of loans settled by 18 of the leading brokers and aggregators as a percentage of ABS Housing Finance commitments — was a strong vote of confidence in the mortgage broking industry, particularly as it coincided with the release of the banking royal commission's final report.
“This is a remarkable outcome for the mortgage broking channel. To record the highest market share in the history of this survey during a period of restricted credit highlights the key role brokers have played in driving competition, choice and access to credit by stepping in to find solutions and provide critical assistance in the redistribution of credit demand," he said.
“The fact that customers have continued to vote with their feet during a period that coincided with the release of the royal commission final report also highlights the strength of this market share result and sends a strong message to policymakers as to the extent to which consumers value the greater industry experience and choice that mortgage brokers provide.”
However, the overall value of lending through the broker channel was down $5.249 billion or 11.39 per cent to $40.847 billion year-on-year, compared to $46.096 billion settled in the March 2018 quarter.
The drop in the value of broker-originated loans reflected the overall weakness in credit growth across the mortgage market, with Comparator stating that the total value of home loans approved declined by 17.86 per cent from $88.642 billion to $72.803 billion.
“Despite the decline in the value of residential lending volumes for this period, brokers have maintained their position as consumer champions. This result clearly shows that mortgage brokers have been able to remain focused on their clients despite all the noise surrounding the industry and continue to deliver unparalleled service and choice to Australian consumers," Mr Felton added.
Industry welcomes the news
Reacting to the news, Susan Mitchell, CEO of Mortgage Choice said: “I am delighted to see that support for brokers has grown in recent months. Currently, six out of ten Australians select the services of a broker to write their home loan and more than 90 per cent of mortgage broker customers are happy with the service they receive.
“The MFAA’s data is a true reflection of the trust customers place in the ability of mortgage brokers to meet their needs and is a testament to the high calibre of professionalism within this industry.
“In what must be described as the strongest customer vote of confidence yet in the mortgage broker channel, the future looks bright for the country’s 17,000 brokers.”
Ms Mitchell noted the growing contribution of the mortgage broking industry to the economy at large.
“These new figures highlight the significant contribution the mortgage broking channel delivers to the Australian economy, especially in the context of a weaker overall property market and at a time when tougher lending practices are at play and credit is restricted,” she said.
Ms Mitchell concluded; “As housing affordability continues to challenge many home buyers, brokers perform a vital service at no cost to the borrower.
“This includes a unique combination of choice and price discovery, coupled with the experience and expertise to help guide them through an increasingly complex environment.”
Likewise, Resimac’s general manager of third party distribution, Daniel Carde, said the results show that Australians truly value the services provided by the mortgage broking industry.
“The market has spoken. These figures are testament to the hard work and high standards maintained by Australia’s mortgage brokers. In these uncertain times, people appreciate the role of brokers as trusted advisers, providing choice, including access to lenders like Resimac, and guidance for their customers.
"The mortgage broking industry has been through one of the toughest periods of uncertainty in its history, and this data is a testament to its strength."
“With all that brokers do, it is no surprise that their share of the mortgage market has grown. Resimac is committed to supporting the broker community by offering a range of mortgage solutions including alternate home loan options to customers who may not meet traditional lending criteria and sharply priced prime loans,” he said.
The release of the MFAA-commissioned research follows the publication of the latest quarterly property exposures statistics from the Australian Prudential Regulation Authority (APRA).
The APRA data revealed that the share of third-party originated loans approved by authorised deposit-taking institutions (ADIs) with a loan book of over $1 billion increased to 50 per cent in the three months ending 31 March 2019, up from 49.7 per cent in same period last year.