Brokers set to thrive amidst “easing of competition”

by Madison Utley17 Sep 2019

Recently released data has revealed an “easing of competition” within the industry, with the ratio of Australians to individual mortgage broker having increased over the last six months, creating room for more opportunities per broker than in the past.

The Mortgage and Finance Association of Australia (MFAA) report released last week examined the broker channel’s performance over the six months from October 2018 to March 2019. According to the data, the national average number of Australians per mortgage broker increased by 28 over the six-month period, with the figure now coming to rest at 1,495.

With the exception of Tasmania, all states recorded an increase in Australians per broker population densities as compared to the six months preceding, indicating a lower level of competition than when the industry population was at its peak.

In fact, the data revealed an “emerging plateau” in the industry population of around 16,900 brokers, with the number of participants having contracted in all states over the last six months aside from Tasmania.  

Victoria has the highest concentration of brokers per capita, followed closely by Western Australia, indicating higher competition.

The Northern Territory has the lowest saturation, with 4,098 Australians per broker, as compared to the national average of 1,495. Tasmania follows closely behind with 4,057 Australians per broker.

According to the MFAA report, 16% of the broker population – 2,332 brokers in total – did not settle a home loan over the six months. This figure is up 1% from the previous period, and “may be a symptom of the tougher market conditions that have emerged.”

As compared to the previous six months, NSW, ACT, VIC, QLD and TAS all experienced a reduction in the number of applications lodged per active broker.

SA and NT maintained the same number of applications, while WA brokers were the only group to be more productive, lodging 13 loans this period as compared to 12 over the last.

While NSW and the ACT stayed consistent with having the largest mortgage broker loan book– valued at $250.1bn and consisting of 36.4% of the overall national home loan book – the last six months saw the weakest period on period growth yet recorded at 2.12%.  

Nationally, brokers’ total loan books grew by 7.3% year on year, as compared to the previous March 2017 to March 2018’s growth of 1.0%.

At the state level, all state loan books grew, with the exception of the Northern Territory, which recorded an 11.6% decrease year on year.