A spike in processing times for mortgage applications has contributed to a decline in the share of broker-originated loans, according to the MFAA’s analysis of new industry data.
The latest data released by research group comparator, commissioned by the Mortgage & Finance Association of Australia (MFAA), has revealed that brokers originated $49 billion in loans in the three months to 31 March 2020, up 20 per cent from $40.8 billion in the previous corresponding period – a record high for the March quarter.
However, this coincided with a 37.5 per cent increase in the value of loans settled across all channels.
Accordingly, broker market share slipped to 52.1 per cent in the March quarter, down from 59.7 per cent in the previous corresponding period, and from 55.3 per cent in the December quarter.
Commenting on the result, MFAA CEO Mike Felton said the rise in the value of settlements reflects “fierce competition” for new borrowers in the proprietary channel, particularly between the big four banks.
Mr Felton claimed that the big banks have leveraged their balance sheet strength to “actively pursue” market share through “aggressive discounting, cash back and fixed rate offerings”.
But according to the MFAA CEO, a spike in turnaround times has affected volumes via the third-party channel.
“[The result] also reflects a blowout in lender credit turnaround times and delays in processing discharges, which will have impacted broker settlements to varying extents in the quarter and particularly given the broker channel’s higher concentration of refinancers,” he said.
Processing times for mortgage applications continued to deteriorate over the June quarter, with Momentum Intelligence’s Broker Pulse figures identifying sharp increases in assessment times for both ANZ and Westpac throughout April and May.
However, Mr Felton said he expects broker market share to recover over the long term, in line with the lifting of industry standards.
“While broker market share over the past year has declined in percentage terms, the broker value proposition remains strong, and we are confident that the reforms currently being implemented will continue to drive trust, confidence and an increase in market share in the years ahead as consumers increasingly turn to the broker channel,” Mr Felton concluded.
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