Mortgage brokers are earning an average of $142,000 per year prior to costs, according to new data compiled by the Mortgage & Finance Association of Australia (MFAA).
The MFAA’s Industry Intelligence Service Report 3
first released via webinar yesterday (10 April) uses aggregator data collated by Comparator to produce business benchmarking and industry information for brokers, said Stephen Hale, the association’s head of marketing & communications.
The report compiled figures from 1 April 2016 to 30 September 2016 and found that brokers earn a national average of $83,000 in gross upfront commission and $60,000 in gross trail commission per year.
“That is before the broker has to take out their operating costs if they’re a sole operator [and] any staff costs,” Hale said. “There are a range of things that come into that before you look at what a broker’s income is, including things such as what tax deductions they have and how they pay tax.”
On a national level, brokers settled an average of $6.02m worth of loans each during the six month period. This equalled an average number of 21 new loan applications and an average loan book of $37.5m per broker.
Average broker market share from July to September 2016 remained stable at 53.6%, a drop of 0.1% from the prior three-month period.
“It does mean that the competitive forces out there are shifting and changing, and that brokers will need to really have a look at what they’re doing in terms of producing great marketing and great customer experiences to ensure that our market share continues to grow,” Hale said.
Nationally, the broker population was approaching 16,000 with 925 more brokers entering the industry in the six months between April and September 2016.
Of the total population, 52.6% of all brokers worked in an office of one or two loan writers. There was also a spike in the number of larger broking operations with 21.6% of brokers working in offices of 11 or more loan writers.
“We’ve been asked ‘Does that mean that the industry is starting to consolidate? Are brokers tending to flock into these businesses rather than be sole operators?’ The data doesn’t indicate that,” Hale said.
However, he acknowledged that this is now a watch point that the MFAA will continue to monitor amongst these larger operators in the future.
Another surprising finding was that 18% of brokers failed to settle a loan in the six month period studied – an increase of 3% from the six months prior.
“I must admit that is something that certainly would be concerning. When you’re heading towards one in five not settling a loan, we’d have to ask ‘Why is that happening?’” Hale said.
The result could be due to a combination of new-to-industry brokers who were yet to perform, as well as experienced brokers living off trail, he added.
“We need to be concerned because if brokers are not settling loans and living off the trail, we need to make sure that – as an industry – how their customers are being handled. It’s a very important issue to ensure that the customers [have] that ongoing customer relationship management even if they’re not writing new loans.”
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