The looming licensing regime, new business infrastructure requirements and deeper commission cuts will drive unprecedented consolidation in the broker industry, according to Aussie Home Loans CEO Stephen Porges.
“You will see an amalgamation going on within the industry, the likes of which have never been seen,” Porges said. “Unless you’re a group that can spread the cost over 500 brokers and up, I think you’re going to struggle. A lot of the participants will disappear.”
Despite this, the JPMorgan/Fujitsu report showed that mortgage broker volumes had rebounded and stabilised through 2009 at approximately 40% of the market.
Latest Comments
Total:
17
comment(s)
Phil on
09 Apr 2010 10:36 AM
Better for the industry or the consumer, I don''t think so!
Pardon Me Broker on
09 Apr 2010 10:52 AM
Aussie John is prone to make big ststements , but brokers will leave due to licencing requirements and ther will be a consolidation of aggregators , is John just promoting the CBA line re curs to commissions - maybe
Stephanie Retchless on
09 Apr 2010 10:53 AM
The increasing regulation is a necessary evil in this industry i.e. it will (hopefully) eradicate the inexperienced, unskilled and unprofessional of those amongst us who are in it for the quick buck. However it will also have a negative side inasmuch that the real ''talent'' within the industry will also leave. Why, because the commissions being paid by the lenders is reducing at such a rate as to make this profession non profitable in terms of the hours taken to 1) find the client and 2) profile the client into a suitable lender. I have recently been removed from two lenders due to my reluctance to place clients with those lenders because their products are inferior. I have also recently lost out to a branch of one of those lenders who did not have the same policies limitations that the credit assessing team seemingly adhered to. At times, in short, this business - sucks.
Ridha Fkih on
09 Apr 2010 10:53 AM
Well established brokers and mortgage managers will ride the waves and win,it is good for the industry i think.
Rodger on
09 Apr 2010 11:01 AM
Big guy Aussie pushing his own barrow here to squeeze the little guy.With 80% of new work coming into banks via the broker channel I don''t think the big four should be too "smart" on how they handle their brokers , or we will be even more cheesed off and move even more clients to 2nd tier and non bank lending.
oldBroker on
09 Apr 2010 11:16 AM
Rodger: absolute lip service. We''ve all seen a million comments by brokers threatening to go to the non-banks, yet market share with the 4 majors continues to rise. Is this what happens when the brokers get ''cheesed off''? Scary. In my mind, the broker is dead. The only reason for brokers traditionally was a) product knowledge and b) loan processing. However, a) online tools are getting better and better for the consumer to make loan decisions, and b) initiatives such as CBA''s push to give online access to the customer to see the progress of the deal makes the broker irrelevant. Dust-off the resumes, boys.
Richad Wyrill on
09 Apr 2010 11:42 AM
Can anyone tell me what numbers JPMorgan/Fujitsu projected in their previous report in relation to broker''s market share given they are now indicating 40%. I''ve always been very uncomfortable about the information or angle that they are coming from and wanted know if anyone else outside the big four feels the same way.
Daryl on
09 Apr 2010 12:18 PM
Is Aussie John merging with CBA or vice versa? Consolidation or less competition?
De Mond on
09 Apr 2010 01:18 PM
I feel we are working twice as hard for half as much. Talk about measuring quality, let the majors look at their own back yard before imposing measures on broker quality, especially when they KEEP changing the playing field..
Patrick on
09 Apr 2010 03:01 PM
"Merge or perish"! This is the sort of comments that were made by big banks in the 1990''s when Aussie was a flegeling but generating competition and growing. The Big Guys are always saying the small guys will never make it. Balderdash!
8 year Broker on
09 Apr 2010 04:43 PM
Comments from one that sleeps in CBA''s bed, and the other that never has anything worthwhile or positive to say about Brokers anyway. The majors will NEVER EVER beat a professional brokers service proposition, so excellent brokers will always be around to service clients that can no longer put up the banks arrogance and incompetence.
brizbroker on
10 Apr 2010 11:38 PM
oldbroker you are absolutely correct in your comments about lip service. Its all well and good for brokers to post "threats" that second tier and non banks will get their support if the majors do this or do that, but the last 2 years has taught the major banks that no matter what changes they impose, they are rewarded with more business. Its just nonsense for people to say otherwise. All the data points to brokers having become order takers for the big 4, and the big 2 especially. For a time it was understandable as the GFC hit and there was uncertainty about smaller lenders commitment to the market after GE and Macquarie left, or their ability to keep rates competitive after RAMS blew up, but 2 years on there are several tier 2 and non bank survivors who have stayed the course, have done the right thing by their customers by keeping their rates in line with or below the majors, and who have done the right thing by brokers by not reducing commissions or introducing volume requirements. Whats the response from brokers been- well its been non existent. There''s been little or no support. Like I have said many times, individual brokers may be smart but collectively we have been silly- we are responsible for our own slow demise because we keep on making toothless threats and keep on being walked over. Imagine if 20% less business was with the majors and 20% more was with tier 2 and non banks... many of the volume requirements and commission reductions may not have occurred. So either you go and learn the products and policies of some of those lenders ( because you will sorely regret them leaving the market, which they will if you continue to ignore them) or dont. But if you dont, you have to accept that you are killing your own industry by failing to promote competition. Without competition there is simply no long term future for brokers- why would the banks need us? It may be years away,it may not. But in 2 years an awful lot has changed, so what Aussie has to say is probably not far off the mark.
Broker on
11 Apr 2010 01:26 AM
Oh sure, I always pay attention to the Fujitsu guru, he''s been all over my finance broking business for a decade now ....not!...who is this this bloke????
Spinner on
12 Apr 2010 09:33 PM
All Porges is saying is the smaller aggregators need to amalgamate as the volumes and brokers numbers are contracting.
Brokers cannot be blamed for using the big 4 over the past 2 years, at the height of the crisis, trying to sell non bank products was like trying to sell a broken down lawn mower. You have to look beyond 2 years though. Something will always change in the industry, that gives rise to a new dawn. Time is a good brokers friend. Why, Mr North do 40% of customers choose a broker? Thats a big number, whats gone wrong at the frontine of the Banks? Are they underpaid? As the Banks have not had a leap in knowledge or expertise, its a case of staying in the game, doing the basic''s well and the opportunities will come. Banks hold the customers until the good brokers can get to them.
SteveOZ on
13 Apr 2010 11:08 AM
Perhaps this may signal the death of the Aggregators? One can only hope so!
Stevo GC on
14 Apr 2010 09:28 AM
Guys!, always remember that the banks are short sighted, and always have been. They will turn around and love us again as greed will always get the better of them.
eloi on
11 Aug 2010 04:55 AM
well im no expert in this field but from what ive been informed the only reason why banks got a bigger share these last 2 years ws the fear the borrowers had of going with a small unknown lender but borrowers are feeling more secure and confortable and are slowly moving towards non bank lenders. So when the good times return the banks will be scrambling to get brokers business againa and offering higher commissions again and to top it off interntioanl banks like hsbc and ing are coming into the aussie market and will be offering higher commissions to try to get brokers attentions. Down with the big 4 i say.