Confidence in the broker market share remains strong, despite the figures dropping in the latest quarter.
The figures for the July to September 2019 quarter show a market share of 54.9%, which is a drop of 4.2% year-on-year. It is also 0.8% below the September 2017 quarter.
While the latest figure is below the previous two September quarters, this is not the only time in the past two years the share has fallen. After the September 2018 quarter high of 59.1%, the share dropped to 56.8% in the last quarter of 2018. Then, in the first quarter of this year, it rose back up to the highest share the industry has seen: 59.7%. Then in the next quarter – June 2019 – it fell back to 55.8%.
Source: MFAA Industry Intelligence Survey 8th Edition
Why the fall in market share now?
MFAA CEO Mike Felton has said the fall in market share is “disappointing”, but it partly reflects the correction in broker market share from the 2018 September quarter, when unusually tight credit corresponded with a higher than normal increase in broker market share.
“During the past quarter, anecdotal evidence suggests that credit policy eased somewhat and that lenders were competing more aggressively through proprietary channels despite a continued trend away from the four majors,” Felton said.
He said this was evidenced by the measures from lenders to attract borrowers, such as with discounts and other incentives, partly a reaction from the competition brokers drive.
What does this mean for the future market share?
Despite the correction, Felton believes the broker value proposition remains strong, underpinned by “choice, experience and strong satisfaction levels”.
“We are confident that the overall broker market share trend over time will maintain an upward trajectory and benefit from reforms currently being implemented that will further drive trust, confidence, and recognition and particularly amongst those who are yet to use a mortgage broker,” he added.
As the industry prepares for the introduction of the Best Interests Duty next year, other groups have also been strong in their belief that broker market share will continue to grow.
Speaking last week after the Best Interests Duty bill was tabled in Parliament, Loan Market executive chairman Sam White said, “We believe the July 1 change will spur the next wave of growth for our industry, taking broker market share to up to 70%, as customers seek out brokers who act in their best interest, rather than a branch manager who works in the interest of the bank.”