In April and June 2023, mortgage brokers wrote 67.2% of all new residential house loans, according to the most recent data made available by the MFAA-commissioned research organization Comparator, a division of CoreLogic.
This was a 2.7% reduction from the first quarter of 2023 statistics and a 0.8% decrease from the same quarter the previous year.
Has the industry’s growth in market share reached a record high after constantly hitting new quarterly highs in 2021 and 2022?
Three well-known mortgage brokers and the trade association say the answer is emphatically no.
Co-founder of The Happy Finance Company, David French (shown above left), claimed these “normal fluctuations” were to be expected.
“Brokers simply need to keep doing what got us to this point, which is to provide exceptional customer service and give clients choice and expert advice,” stated Green, whose brokerage is a finalist (excellence awardee) in the Australian Mortgage Awards (AMAs) for Bankwest New Brokerage of the Year.
Blusk’s director, Chris Bates (shown above, center left), concurred, stating that the long-term trend was more important even though the statistics indicated some short-term stagnation.
Because life rarely takes a straight, linear road, Bates stated, “I don’t see it as a concern.” The AMAs’ FBAA Broker of the Year—Residential category winner Bates added, “I have friends in the industry who have been struggling since the market share was as low as 2%.”
In retrospect, the tendency has typically only gone one way. According to the MFAA, the broker market share was 44.9% ten years ago and 53.9% in 2018.
Anja Pannek, the CEO of the MFAA, is depicted above, middle right. She stated that brokers should be proud of the outcome, which is above 67%.
Pannek stated, “The market share trajectory of mortgage brokers is one that has been well earned through the industry’s professional implementation of reforms, particularly the Best Interests Duty, which has only served to strengthen the confidence borrowers have in their broker and the brokers’ dedication to their clients.”
Although opinions are still positive, it is undeniable that mortgage brokers’ attempts to take market share away from the bank have stagnated.
Why has the market share of mortgage brokers plateaued?
Mortgage brokers closed $88.62 billion in house loans in the June 2023 quarter; this is a 7.8% annual decline from the $96.08 billion closed in the June 2022 quarter.
Bates claims that a big part of the problem stems from the current status of the market, where borrowers are having to deal with increasing rates and tactics from lenders during a refinancing boom.
“Strong retention pricing by banks is making it difficult for brokers to refinance, which is causing clients to stay with their current lenders instead of refinancing,” Bates stated.
Romesh Jayasundara (far right in the above photo), a senior mortgage broker at the Victoria-based brokerage Reventon, reported that he had observed customers paying a lot of attention to rebates, interest rates, and comparison shopping.
“I believe that clients who wish to borrow more money or expand their investment portfolio are now hesitant to do so due to the interest rate increases over the past 18 months,” Jayasundara stated.
The historical refinancing levels, however, can also offer brokers a chance to add value.
According to Jayasundara, “Borrowers want to understand their options because understanding the current market rates can be quite daunting, and being on a low fixed rate for that long has become affordable and comfortable.”
“A good and great broker will comprehend their client’s needs at a deeper level and help to meet those needs; this could be refinancing for the best rate, growing their portfolio, or comprehending the retirement strategy, even though this may be advantageous to the client.”
Pannek concurred, stating that mortgage brokers still offer crucial knowledge and assistance to people refinancing as well as purchasing homes.
Indeed, when fixed-rate contracts expire and borrowers weigh their options in the current economic climate, the so-called ‘ refinancing boom’ has attracted new clients to the broker channel, according to our most recent member survey. There are still over a million fixed rate terms that will expire this year and in 2024, which presents a significant opportunity for mortgage brokers.
From here, how can mortgage brokers increase their market share?
Although industry experts predicted that the market share would reach 80% by now, the most recent figures have confirmed that brokers will need to keep working hard to rise above two-thirds of the market once more.
According to French, mortgage brokers stand to gain from the growing number of consumers searching for better home loan options.
Customers are contacting us more frequently in search of new options, according to French. We are able to assist with retention and offer knowledgeable guidance to both new and current clients by leveraging technology, artificial intelligence, and proactive client reviews.
According to Bates, brokers will continue to succeed because there are more brokers entering the market than ever before—over 19,000 in March.
Individuals who are making big judgments about real estate would rather not deal with banks or online lenders directly. They want a guide through the process, a number of options, and someone they can trust, according to Bates.
“You’ll see the broker share continue to expand as soon as the property market wakes up again, especially with first-time buyers and investors returning. A genuine value proposition is the foundation of the brokerage sector. In the event that the market shifts and purchases rise, brokers will continue to be competitive.
Dividing the direct market in part
Although it’s natural to assume that the market share growth trajectory will continue, brokers must concentrate on a certain segment of the direct market in order to get traction.
According to Bates, brokers should see online platforms and digital banks as rivals and work to close the gap by using technology to improve customer service.
“Brokers must embrace technology and concentrate on enhancing their client experience in order to remain competitive. We’ve already defeated them with advice; now let’s defeat them with effective, technologically advanced services.
Our meetings take place virtually, and we use DocuSign and other similar tools to sign documents. We are investing a lot of money in digitizing our services to improve the quality of our customers’ experiences.”
