Brokers to claim more market share
By
Ben Abbott
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5/11/2010 5:45:00 AM
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3
comments
Leading industry analysts have predicted third party brokers could claim up to 60% of the mortgage origination market within five years.
Speaking at the LIXI 2010 conference in Sydney, Fujitsu Consulting general manager Martin North, Mortgage Industry Analyst Tony Crossley and NextGen.Net sales director Michael Murphy all predicted imminent improvements in broker market power.
The JP Morgan/Fujitsu Australian Mortgage Industry Report report released in September measured broker market share at just under 40%. However, North thinks the next five years will see major bank market share dominance sink, while brokers will rise.
"I think we will see 60 per cent [of housing loans] funded by the majors, so that's 40 per cent from elsewhere," North said. "I think that mortgage brokers will have well north of 40 per cent of the market - it could be close to 50 per cent - because if you look at the consumer research, they are doing the right thing by consumers, and with the new regulatory environment in place that will only improve."
Murphy from NextGen.Net agreed major banks would shrink to 60% of the market, and that third party market share could reach 60%.
"Any shift in funding away from the four majors would almost automatically imply through brokers or an alliance channel - there's a fairly strict correlation between those two - so if you accept the premise [that major banks will fund only 60% of the market within five years] it wouldn't surprise me if mortgage brokers increased up to 60%.
"I think there is every chance, because I do think over time there will be a levelling out on the revenue and the cost side of that relationship, so it will become a more palatable and more supported relationship over time - I really believe that."
Crossley was more muted in his predictions. "It's been essentially flat for some significant period, and it will require a different market for that to take off to the levels we've seen overseas, and I'm not sure it will get that far."
However, he acknowledged the role brokers will play in increasing market competition with the four majors. "A lot of the rhetoric underestimates the impact of the broker - they do actually promote competition from their little office," he said. "They will draw out price comparisons and product comparisons, so it's actually a very effective way of generating a market."
Latest Comments
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Surprised by Martin North on
06 Nov 2010 06:37 PM
Wow, Mr North after he paved the way for the broker commissions to be cut by the bank and after testing the waters in the press before the cuts took place. He had on several occasions claimed that we are paid too much commission and that we make too much money by refinancing clients several times during the life of a loan.
He is now predicting a better market share for the brokers. Perhaps, the banks that he made favour for did not come through with their pay-back.
Nevertheless, it is nice to see that brokers are being appreciated by the consumers and that they do a good job in looking after customers.
Let''s hope it continue that way.
ta
Timbo2 on
07 Nov 2010 12:24 PM
What rubbish. Martin North is only saying what the Next Gen people want to her at their presentation. I seem to recall Fujitsu Consulting warning consumers against using brokers because of terrible fees, poor professionalism etc. It''s difficult to see how an industry can grow when incomes are cut 30%, clawback provisions extended and increasingly reduced trail. Add the costs associated with the new compliance regime it''s probably more profitable to drive a taxi.
mortgageandlease on
08 Nov 2010 10:43 AM
biggest load of BS I have heard in a while. The figures dont add up. They are expecting a 20 - 25% reduction in Broker number over the next 2 years and the entry level qualifications for new brokers is such, that it is becoming increasing impossible for them to successfully enter the market. To increase the 60% in the market, it would need every single broker left to almost double there existing output, and I for one, cannot see myself getting anywhere near that sort of increase, especially on the back of less commissions and no ability to employ a file manager anytime soon, to even allow me to attain that sort of growth.