Key concern of ASIC’s remuneration review addressed as share of loans going to big four falls steadily since 2015
.gif)
Key concern of ASIC’s remuneration review addressed as share of loans going to big four falls steadily since 2015
Brokers are moving away from the major banks and their subsidiaries, new data from the MFAA has revealed.
The proportion by value of loans going to the major banks fell by 4.6% from October to March, according to the MFAA’s Industry Intelligence Service report. This was compounded by a 10.7% fall in business to non-major banks owned by the majors.
In fact, the share of loans going to the majors has fallen during almost every quarter since August 2015, going from 59.8% to 53.0%.
“This report is showing a shift in the broker use of loan products from majors and regionals aligned to majors to specialist lenders, international lenders and broker white label products,” MFAA CEO Mike Felton said.
“Greater diversity is good news in that it strengthens the broker proposition and competition within the mortgage market.”
Why market share matters to ASIC
By reducing the proportion of loans going to major banks, brokers have addressed one of the key concerns of ASIC’s Review of Mortgage Broker Remuneration.
80% of loans written by the average broker business went to just four lenders, ASIC found. The most commonly recommended lender for 74% of broker businesses was a major bank.
ASIC used their findings on market share to argue for strong restrictions on commissions and volume related bonuses and soft-dollar incentives, noting: “we consider that the improvements to remuneration structures we are proposing and a new public reporting regime could improve competition in the home loan market.”
The MFAA’s findings are well-timed, with the Combined Industry Forum due to recommend changes to commissions to the Treasury this month.
Who’s benefitting?
International lenders were the big beneficiaries of the major banks’ struggles during October to June, with their lending growing 29.4%.
However, over the long-term, the growth of the non-bank sector is most noticeable. During 2013 the non-banks’ marker share hovered around the 2% mark; in March this year, it hit 5.7%.
Non-banks have benefitted from the ability to lend to investors and in some cases non-residents, they told MPA’s recent Non-Banks Roundtable.
Firstmac founder Kim Cannon argued that non-banks could appeal beyond niche borrower groups: “competing for owner-occupied customers; we’re not just picking up the scraps from the banks because they fall into our laps today, and when they’re ready they’ll come back and take it from us.”
“We’re 5% of the market; let’s go to 10%; let’s go to 20%...I want to see our industry build.”
Brokers are moving away from the major banks and their subsidiaries, new data from the MFAA has revealed.
The proportion by value of loans going to the major banks fell by 4.6% from October to March, according to the MFAA’s Industry Intelligence Service report. This was compounded by a 10.7% fall in business to non-major banks owned by the majors.
In fact, the share of loans going to the majors has fallen during almost every quarter since August 2015, going from 59.8% to 53.0%.
“This report is showing a shift in the broker use of loan products from majors and regionals aligned to majors to specialist lenders, international lenders and broker white label products,” MFAA CEO Mike Felton said.
“Greater diversity is good news in that it strengthens the broker proposition and competition within the mortgage market.”
Why market share matters to ASIC
By reducing the proportion of loans going to major banks, brokers have addressed one of the key concerns of ASIC’s Review of Mortgage Broker Remuneration.
80% of loans written by the average broker business went to just four lenders, ASIC found. The most commonly recommended lender for 74% of broker businesses was a major bank.
ASIC used their findings on market share to argue for strong restrictions on commissions and volume related bonuses and soft-dollar incentives, noting: “we consider that the improvements to remuneration structures we are proposing and a new public reporting regime could improve competition in the home loan market.”
The MFAA’s findings are well-timed, with the Combined Industry Forum due to recommend changes to commissions to the Treasury this month.
Who’s benefitting?
International lenders were the big beneficiaries of the major banks’ struggles during October to June, with their lending growing 29.4%.
However, over the long-term, the growth of the non-bank sector is most noticeable. During 2013 the non-banks’ marker share hovered around the 2% mark; in March this year, it hit 5.7%.
Non-banks have benefitted from the ability to lend to investors and in some cases non-residents, they told MPA’s recent Non-Banks Roundtable.
Firstmac founder Kim Cannon argued that non-banks could appeal beyond niche borrower groups: “competing for owner-occupied customers; we’re not just picking up the scraps from the banks because they fall into our laps today, and when they’re ready they’ll come back and take it from us.”
“We’re 5% of the market; let’s go to 10%; let’s go to 20%...I want to see our industry build.”
