Lender competition for broker market share has never been stronger, say industry leaders, and both brokers and their clients are reaping the benefits.
Loan Market executive chairman Sam White says investments in customer service and efficiency from the broker channel have seen a consumer shift towards third party lending – and lenders have taken notice.
“Consumers are choosing brokers over first party and banks are realising this is a channel they need to be good at, not just be in. As a consequence of that brokers and banks are looking at a long term view of how we can invest together to get a better outcome for the consumer and for each of the parties involved.”
Banks have started offering larger rewards for high quality submissions instead of just high loan volumes, says White – and further commission hikes are likely.
“I think you’re going to see commissions rise as the quality of the submissions continue to rise... There have always been a number of discourses occurring and I’m sure those announcements will be made available in the next two to three months.
“All we’re seeing now is a realignment. Brokers have helped lenders take cost out of the system, so then lenders are happy to reward brokers for doing it and they’re sharing the return in income from better processes, better investment in systems structure... all those types of things."
“Aggressive” consumer policies and product pricing, along with strong retention teams, mean the banking sector is more competitive than ever, says White.
“Anyone who says otherwise clearly doesn’t understand the industry. I don’t know any other markets that are as competitive as we are here, especially for the ‘Mum and Dad’ home loans.”
Marl Hewitt, AFG general manager of sales, says the high level of competition between lendres is a boon for borrowers and for brokers.
“It’s a great time for consumers. From the lender side competition has never been greater. We’ve got banks knocking on our doors asking how they can get our business,” says Hewitt.
“The gap between the lender getting the greatest share of our business and those getting the least is very tight at this point - and for the first time ANZ
has overtaken CBA
as the top lender for our business.
“Everyone’s getting more competitive and the second-tier lenders are really driving that competition which has resulted in great benefits for the consumer.”