Broker numbers are tipped to fall by up to 5,000 as lending volumes slide, commissions are cut and regulation nears implementation.
According to Mark Hewitt, general manager of sales and operations at Australian Finance Group (AFG), market conditions are the toughest he has seen in 20 years and are set to drive broker numbers down.
“There’s definitely going to be pain and some brokers will start to question where they are and what they are doing,” Mr Hewitt told Mortgage Business.
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“At the moment there are around 15,000 brokers nationwide but I’d expect that number to fall to around 10,000 after commission restructuring and regulation take effect.”
Ray Hair, chief executive officer of PLAN Australia, agreed that market conditions would “shake up” broker numbers in some sectors.
“I’d expect attrition to come mostly from those brokers on the edge of the industry – those who aren’t working full-time or those with other business interests,” he said.
Like AFG – which reported a 22 per cent slide in loan volumes from June 2007, its lowest monthly loan sales on record – PLAN Australia also expected lower loan volume growth over the coming year.
“I don’t think we’ve actually seen a market like this in past years. We have a combination of factors influencing the market – from high inflation to high interest rates,” Mr Hair said. “We are experiencing only half our usual business growth.”
But despite the current challenges, Mr Hair remains positive about the long-term potential for the industry.
“It’s all about leveraging opportunity; that’s what we are communicating to our brokers. Those businesses with strong business models will be the ones to endure the market conditions,” he said.
At a glance
• Broker numbers to fall from 15,000 to 10,000
• Attrition to come from brokers that are not working full-time or those with other business interests
• PLAN Australia and AFG expect lower loan volume growth over the coming year
