Broker profits take a hit despite market share gain

by Adam Smith17 Oct 2012

Market share gains haven't made up for declining profitability for mortgage brokers, a new report indicates.

The JP Morgan Australian Mortgage Industry report shows that the proportion of new loans originated by brokers has continued to climb. 
The report indicated that broker market share was approaching pre-GFC levels of 45%. But while brokers are taking a greater share of the market, their bottom line has failed to benefit.
According to Fujitsu analyst Martin North, broker profitability is down.
"Brokers are still doing reasonably well, but it's on a much lower volume. Therefore, the commission pools are much smaller," he said.
North said broker numbers are down, and suggested those remaining in the market are finding conditions difficult.
"A proportion of those we surveyed indicated they didn't have a very profitable business," he said.
The report has also revealed broker use by major banks. JP Morgan claimed Westpac was continuing to focus on proprietary distribution over broker use, while CBA maintained its broker usage levels and ANZ remained strong in the channel. NAB, meanwhile, has seen its surge in mortgages underpinned by broker use.
"It has been NAB whose growth rates are benefitting the most from reengagement with the broker channel," the report said.


  • by Paul Goldring 17/10/2012 10:21:26 AM

    In 10 years I don't recall being busier than at present. Brokers should think long and hard about their business structure to minimise their overheads, that way they will remain profitable in quieter and busier times.

  • by Dave 17/10/2012 10:27:59 AM

    Imagine that Mr. North, after all your talk of brokers earning too much a few years ago & banks should cut you say we're all doing well but at the same time everyone in the industry aren't as profitable? You must have been a rocket scientist in a past career.
    How about you stop bagging our industry & comment elsewhere!

  • by sidbroker 17/10/2012 10:30:58 AM

    NCCP is the BIG PROBLEM as it has stoped a large percentage of our people from being able to borrow. This has impacted dramatically on our housing industry right accross the board.