Broker loans larger than direct: ANZ

The bank’s CEO has given some candid comments around brokers and thrown his support behind the third party channel

Broker loans larger than direct: ANZ



The CEO of Australia and New Zealand Banking Group (ANZ) has highlighted differences between loans taken out through mortgage brokers versus direct through the bank.

Responding to a question by Australian Broker during the bank’s financial results briefing yesterday (26 October), ANZ CEO Shayne Elliot said that broker originated loans were larger and performed slightly worse than those brought in through proprietary channels.

“You’re more likely to go to a broker if you’ve got a big mortgage because saving a few basis points here and there is a bigger dollar amount,” he said.

Broker-originated loans performed “a little bit worse than the average” he added, although acknowledging that this difference was “really minor”.

Overall, ANZ was a big supporter of brokers, Elliot said. In fact, the bank’s annual financial results show that 51% of its total loans originated through the third party in FY17. This was an increase from the 49% recorded in FY16.

“We love brokers,” he said. “We’ve always been a supporter of the broker channel because we know that customers really like it.”

With a small branch network – around half that of CBA – and as the only major bank without ownership of a broker network, ANZ chose to work collaboratively with brokers.

Elliott predicted that broker market share would increase to 70% in Australia, following the parallel success of the third party channel in Northern Europe’s similar market.

“I think it’s a legitimate channel. I think it’s going to continue to grow,” he said.

“Our responsibility is to make sure that we choose the right brokers to deal with. That’s about their behaviours, their culture, their way of working, and we’re really focused on doing that and raising standards in the broking industry.”

ANZ’s total home loan book rose from $246bn to $264bn between FY16 and FY17 with the average loan size rising from $252k to $262k during the same time period.

The bank’s loan book break down for the 2016 and 2017 financial years is as follows:
  FY17 FY16
Principal & interest 69% 64%
Interest only 31% 36%
Owner occupier 63% 62%
Investor 33% 34%
Equity line of credit 4% 4%
First home buyer 7% 7%

The average LVR at origination has dropped from 71% to 69% year-on-year while mortgagees ahead of repayments dropped from 73% to 71%. Market share increased slightly from 15.5% to 15.7% during the same time period.

Related stories:

Sedgwick broker proposals “complicated”: ANZ

Banks have lost “social right” to make a profit

“We want to become the bank for brokers”

Keep up with the latest news and events

Join our mailing list, it’s free!