Has mortgage dealer market share stagnated?

Mortgage brokers wrote 67.2% of all new residential dwelling loans between April and June 2023, based on the most recent information launched by analysis group Comparator, a CoreLogic enterprise, and commissioned by the MFAA.

This represented a 2.7% decline on 2023’s first quarter information and 0.8% lower in comparison with the identical quarter final 12 months.

After a sustained interval of reaching new quarterly peaks all through 2021 and 2022, has the trade hit the roof by way of market share progress?

The reply is a powerful “no” based on three distinguished mortgage brokers and the trade’s peak physique.

David French (pictured above left), co-founder of The Completely happy Finance Firm, mentioned these “regular fluctuations” had been to be anticipated.

“To extend market share, brokers simply have to hold doing the identical factor that bought us to this stage, which is to offer distinctive customer support and giving purchasers alternative and knowledgeable recommendation,” mentioned Inexperienced, whose brokerage is a finalist (excellence awardee) within the Bankwest New Brokerage of the Yr award at this 12 months’s Australian Mortgage Awards (AMAs).

Chris Bates (pictured above centre left), director of Blusk, agreed saying that whereas the info confirmed some stagnation within the brief time period, it was the long run development that mattered.

“I do not see it as a priority as a result of life not often follows a straight linear path,” Bates mentioned. “I’ve associates within the trade who’ve been struggling for the reason that market share was as little as 2%,” mentioned Bates, who can also be an excellence awardee for the FBAA Dealer of the Yr – Residential award on the AMAs.

Wanting again, the development has usually solely adopted one route. In 2018, dealer market share was 53.9% whereas 10 years in the past it was solely 44.9%, based on the MFAA.

MFAA CEO Anja Pannek (pictured above centre proper) mentioned to see it at over 67% was a end result that brokers “will be pleased with”.

“The trajectory of mortgage dealer market share is one which has been properly earned via mortgage brokers’ dedication to their purchasers and the skilled method through which the trade has applied reforms, significantly the Finest Pursuits Responsibility which has solely served to strengthen the boldness debtors have of their dealer,” Pannek mentioned.

Why has mortgage dealer market share stagnated?

Whereas the sentiment stays excessive, there isn’t any denying that mortgage brokers muscling in on the banks’ market share has stalled.

Throughout the June 2023 quarter, mortgage brokers settled $88.62 billion in dwelling loans – year-on-year this represents a 7.8% lower from the $96.08 billion settled within the June 2022 quarter.

Bates mentioned this was largely pushed by present market situations, which had seen debtors battle rising charges and techniques from lenders amid a refinancing increase.

“Brokers are dealing with challenges in refinancing resulting from robust retention pricing by banks, which is inflicting purchasers to stick with their present lenders quite than refinancing,” Bates mentioned.

Romesh Jayasundara (pictured above far proper), senior mortgage dealer for Victoria-based brokerage Reventon, mentioned he had seen purchasers centered closely on rates of interest, cashbacks and searching for comparisons.

“I really feel the rise within the rates of interest during the last 18 months has triggered doubt in purchasers eager to borrow extra money or enhance their funding portfolio,” Jayasundara mentioned.

Nevertheless, the historic ranges of refinancing might also current a chance for brokers so as to add worth.

“Debtors wish to perceive their choices as being on low fastened fee for that lengthy had change into inexpensive and comfy and understanding the present market charges will be fairly daunting,” Jayasundara mentioned.

“As this can be helpful for the shopper, the distinction between an excellent and nice dealer is knowing the shopper’s wants on a deeper stage and aiding to fulfill these wants – this may very well be refinancing for the very best fee, rising their portfolio, understanding the technique in direction of retirement.”

Pannek agreed, saying that mortgage brokers continued to offer important experience and assist to homebuyers, and people refinancing.

“Certainly, our latest member survey confirmed that the so referred to as ‘refinancing increase’ has introduced new purchasers to the dealer channel as fastened fee phrases finish and debtors navigate their choices within the present financial setting. With over a million fastened fee phrases nonetheless to finish this 12 months and into 2024, it is a large alternative for mortgage brokers.”

How can mortgage brokers acquire market share from right here?

Whereas the optimists of the trade had mentioned the market share could be cracking 80% round about now, the most recent outcomes have solidified the truth that brokers might want to proceed their efforts to get comfortably above two-thirds of the market once more.

French mentioned mortgage brokers had been properly positioned to profit from the rise of consumers on the lookout for a greater possibility with their dwelling mortgage.

“We’re seeing a rise in enterprise quantity from prospects reaching out on the lookout for extra selections,” French mentioned.  “By utilising expertise, AI and pro-active shopper critiques we’re capable of assist with retention and offering knowledgeable recommendation to each new and present purchasers.”

Bates mentioned with extra brokers coming into the trade than ever earlier than, reaching over 19,000 in March, brokers would proceed to excel.

“When folks make vital property selections, they like to not work instantly with banks or on-line lenders. They need somebody they’ll belief, a information via the method, and a number of choices,” Bates mentioned.

“As quickly because the property market picks up once more, particularly with first-time consumers and traders returning, you will see the dealer share proceed to develop. The broking trade is constructed on an actual worth proposition. As purchases enhance and the market modifications, brokers will stay aggressive.”

Taking a bit out of the direct market

Whereas it’s simple to assume that the trajectory of market share progress will proceed, it’s additionally vital for brokers to concentrate on a particular space of the direct market to make inroads.

Bates mentioned brokers ought to view digital banks and on-line platforms as their opponents and attempt to bridge the hole by enhancing their buyer expertise via expertise.

“To remain aggressive, brokers have to concentrate on bettering their buyer expertise and embracing expertise. We already beat them on recommendation nevertheless it’s time to beat them by driving environment friendly, tech-driven providers.

“Our conferences are digital, and we leverage applied sciences like DocuSign for doc signing. We’re making vital investments in digitising our providers to reinforce the client expertise.”