Lenders believe third-party mortgages will gain a 60 per cent market share due to their new focus on sticking close to brokers.
According to a report commissioned by the MFAA, lenders noted they are embracing a new partnership model with brokers.
This partnership involves lenders and brokers working together to provide customers “with the most appropriate proposition and thereby focus on retention”.
Lenders believe this model will become more prevalent, thereby increasing the total contribution of broker-originated mortgages to approximately 60 per cent.
Brokers were responsible for a record 51.9 per cent of new home lending in the March quarter.
The report added that lenders also believe that well-managed brokers have amassed large back books and are therefore less focused on churning customers to get an upfront commission.
“Brokers are, however, looking to acquire customers for new mortgages and therefore are an effective channel at targeting first home buyers and investor borrowers,” it said.
In regards to the types of loans being originated, 40.5 per cent of broker volumes validated by lenders are from investors, while 37 per cent are from owner-occupiers.
First home buyers make up 14 per cent of broker-originated loans, while commercial borrowers make up 6.0 per cent, and other types of borrowers make up 2.5 per cent.
The report also said that lenders now view the broker as an ally in retaining existing customers.
“Brokers account for approximately half of new mortgage flow and, where customers have allowed this, lenders now share information with brokers in order to service customers more effectively,” it said.
Furthermore, the broker channel provides regional and non-bank lenders with the scale to enter customer segments and geographic markets, which otherwise wouldn’t have been accessible.
“Consequently, brokers account for significantly more of new mortgage flow, with many noting the broker accounting for approximately 90 to 95 per cent of new flows,” the report said.
“The use of brokers by these lenders has enabled them to compete more effectively in the market with the majors.”
[Related: Banks' property exposure continues to rise]