Finance brokers are celebrating the latest statistics from the MFAA and research group Comparator that show they achieved their highest-ever market share— 59.1% of all new residential home loans in the September 2018 quarter, and the largest year-on-year increase for any quarter in the last four years.
“The fact that six out of 10 loans are generated by our industry underlines the confidence people have in brokers and the rising trajectory of our value,” Damien Roylance, director of Entourage, told MPA.
“A larger market share does raise the profile of brokers but, more so, it highlights the preference of the marketplace: Customers prefer to entrust their financial well-being to a professional who will prioritise their - not the lender’s - best interests.”
As brokers’ market share increases, they’re hoping that so too will their influence, ammunition that’s needed now more than ever as the industry awaits the royal commission’s final report.
“I feel confident this adds credibility to the industry's argument to not make significant changes to broker remuneration,” said Aaron Christie-David, managing director of Atelier Wealth.
“Australians are voting with their feet to choose a mortgage broker over going direct to a bank and I would be hoping the royal commission doesn't see the need for increased regulation. We've clearly demonstrated our value proposition is to find good customer outcomes and a record market share reflects this.”
Industry bodies have spent time, money and great effort lobbying the government to prove brokers’ relevance and importance to the financial ecosystem. “Whether those arguments have resonated with the commission remains to be seen,” Roylance said. The final report is due out on Feb. 1.
“But I think, in an election year, the government needs to appreciate the role played by brokers in securing customers’ goals. When the data shows, in black and white, the willingness of the market to seek out broker expertise and connections for the best outcome, it’s in the government’s interests to respect the decisions of constituents.”
Drop in lending
While this unprecedented market share bodes well for brokers, overall lending from the September 2017 to the September 2018 quarters dropped by $8.46bn, or by 8.5%.
Broker volume specifically dropped by only 3% from $51.7bn to $50.1bn.
“The reduction in broker lending is a reflection of the property market— the last four years were such a strong period that we had to expect the market to retract at some point. Our business isn't slowing down and we've been experiencing strong settlements, exceptional client referrals and introductions from business partners because we're determined to find solutions. We're positive for a strong 2019,” Christie-David said.
Roylance said the drop in lending wouldn’t come as a surprise to anyone in the sector seeing as access to finance has been an industry-wide challenge.
As such, his brokerage has been focusing on education and service value to customers.
“Education has always been central to my customer offering; showing customers how their spending and saving habits not only impact their financial journey, but also their capacity in the eye of lenders. I’ve really amplified that part of the customer experience over the last year to make sure my clients have an easier financial experience.”