Three brokers have expressed their various perspectives on diversification in the mortgage broking industry.
With the number of home loan applications declining across the industry amid rising interest, Loan Link broker Alma Zubovic (pictured above left) has diversified into the commercial lending and motor finance space.
“I’ve noticed an increased demand outside of residential lending particularly with businesses looking to expand, and therefore purchasing warehouses, more office space, or seeking funding for new fit-outs,” Zubovic said.
Zubovic is not alone in her pursuit to diversify. MFFA data from the 15th edition of its Industry Intelligence Service report showed the number of mortgage brokers involved in writing commercial loans has more than tripled in a span of seven years, surpassing 6,000 for the first time between April and September 2022.
Additionally, the value of settled commercial lending experienced notable growth, reaching more than $17 billion for the first time and reflecting a year-on-year increase of 28.65%.
Others in the industry have welcomed the push to diversify, with some lenders urging brokers to branch out while others call commercial lending a “gold mine”.
And with only around 20% of all commercial loans being done through brokers compared to 70% of residential loans, you can see why.
However, not all mortgage brokers are buying into the long-term trend just yet.
“To be honest I think there is so much opportunity in this current market in residential lending,” said Adele Andrews (pictured above right), director of Australian Property Home Loans.
“Settlements are down but I suspect that is more to do with stock levels being a challenge because I have seen a huge shift in inquiries for pre-approvals to purchase and a lot of pent-up demand.”
Andrews said that she hadn’t seen a dip in applications. However, due to the current challenging market for buyers, she admitted there was a need to strike a balance by focusing on deals that were successfully settled, such as refinances, while maintaining a healthy mix of pre-approvals and purchases.
“I haven’t diversified so far because I don’t feel I have exhausted all there is to do in the residential market. There is always more to find if you hunt hard and smart enough in the right places, and I am a bit of a believer of staying in my lane,” Andrews said.
“The residential lending market is huge, there is always something to find there if you are consistent enough with your search.”
To diversify or specialize
On the other end of the spectrum, Pure Capital asset broker Teoman Morgil (pictured above center) said he understood the desire for mortgage brokers to branch out their services.
But as a former mortgage broker himself, Morgil recommended specialization over diversification due to the “importance of time limitations” and providing clients with “dedication and expertise”.
“To deliver the highest level of service to clients, it is often more effective to specialize in one area and establish partnerships with reputable asset finance companies,” Morgil said. “This allows brokers to focus their efforts on mastering the intricacies of their chosen field, ensuring that they can provide clients with comprehensive and tailored solutions.”
While their opinions differ, all three brokers agree that diversification is ripe for the picking if brokers want it bad enough.
Andrews said like anything in life, if you applied yourself to the learnings, it could be done.
“I just feel I have enough on my plate with what I am doing, that taking on another market would see me probably tip over the edge,” Andrews said.
Zubovic said if you are organized and determined for the challenge, diversification could be “very beneficial” to your business. “With the right plans and procedures in place, the reward should generally outweigh the risk.”
Morgan agreed and said that success in broking revolved around “mastering your craft”, regardless of specialization.
“To excel you must sharpen your skills, adopt a client-centric approach, possess extensive industry and product knowledge, cultivate strong relationships through networking, and remain committed to continuous learning and personal growth,” Morgil said.