An industry leader has predicted that the broker channel could see a market share as high as 80% within the coming years.
Speaking to Australian Broker, Allan Savins, executive director at Better Choice Home Loans, said that complexities in the lending market, access to finance and the value proposition of a fee-free service, will all support the growth of the third-party channel.
“I think that in terms of market share, we will see it hit 60% of all new home loans originated through the broker channel over the coming two quarters and by 2025 we will see the channel reach 75 – 80% market share,” Savins said.
Data released in January confirmed brokers currently enjoy their highest market share, settling 59.1% of all home loans in Australia over the September quarter, despite an overall reduction in lending of $8.46bn compared to the same period in 2017.
The figures were calculated by research group comparator, a CoreLogic business. Compared to previous September quarter results of 53.6% in 2016 and 55.7% in 2017, 59.1% is the largest year on year increase for any quarter in the last four years.
“Regardless of the royal commission, there is still a need for brokers to find the best outcomes for their borrowers. I honestly believe the value proposition remains for brokers and the environment will only become more complex in terms of products, compliance and regulation,” Savins said.
“There is an absolute need for brokers and that’s why I think you will see a higher market share,” he added.
His comments were made as part of a roundtable discussion on the future of broking, that will be published in Australian Broker next month.
In February, PM Scott Morrison said, “I want to see as many mortgage brokers in this country, five years from now, in fact, more than there are today.
“I don’t want to see this sector wither on the vine and be strangled by regulation that would throw them out of business, but more importantly, would deny choice and competition in the banking system,” he added.
However, the downward trend in lending continues, setting a new record according to ABS figures released this month. The year on year decrease hit 20% in January – the largest through the year decline since late 2008.
New lending commitments to households dropped 2.4% in January, following a 3.6% decrease in December 2018. Compared to January 2018, new lending is down 16% seasonally adjusted.
The latest QMS data on broker market share is next scheduled for release in April.