Home owners and buyers are increasingly choosing to secure finance through the mortgage broker channel, with new figures showing a significant rise in mortgage broker market share.
Latest data released by CoreLogic business, mortgage brokers settled 59.1% of all residential home loans in the September quarter 2018. This figure is up from 53.6% in the same quarter of 2017 – the largest year-on-year increase for any quarter over the last four years.
Whilst the settled broker volumes value dropped between the September 2017 and September 2018 quarters from $51.77 billion to $50.19 billion, this is due to the drop-in property values and a tightening in credit conditions.
Mortgage brokers supporting borrowers in tight lending conditions
Mike Felton, CEO of the Mortgage and Finance Association of Australia (MFAA) said: “This result has occurred during a period of severe credit tightening with brokers stepping in to provide critical assistance in the redistribution of credit demand for those seeking home lending.
“As banks have persisted in making it more difficult to secure a loan, turning many would-be borrowers away, consumers have continued to increasingly utilise the broker channel for experience, expertise and greater market choice to secure access to credit.”
He continued: “In addition to providing customers access to a panel of 34 lenders on average, brokers are ideally positioned to help customers, especially those with more complex lending scenarios, to understand the ever-evolving application process and provide the information necessary to meet changing lender requirements.
“Mortgage brokers continue to offer choice to consumers and ensure credit continues to flow, which is of systemic importance to the housing market and a strong economy.”
Value of mortgage brokers yet to be recognised by government
The mortgage broker industry has attracted a new level of interest as a result of the Banking Royal Commission. Large banks interviewed during the investigation process have thrown mortgage brokers under the bus to distract from their own misconduct. As a result, the remuneration of mortgage brokers may receive continued focus when the draft report is released in February 2019.
A change to the way mortgage brokers are remunerated will see consumers at a disadvantage as they will either have to pay for mortgage broker services (currently free) or find it difficult to source the help from mortgage brokers as their businesses become less viable under a new remuneration structure.
We hope the government will see the real value of mortgage brokers and resist the urge to change broker remuneration, so we can continue to support consumers.