Has mortgage broker market share stagnated?

Brokers wrote 67.2% of home loans over the quarter

Has mortgage broker market share stagnated?


By Ryan Johnson

Mortgage brokers wrote 67.2% of all new residential home loans between April and June 2023, according to the latest data released by research group Comparator, a CoreLogic business, and commissioned by the MFAA.

This represented a 2.7% decline on 2023’s first quarter data and 0.8% decrease compared to the same quarter last year.

After a sustained period of reaching new quarterly peaks throughout 2021 and 2022, has the industry hit the roof in terms of market share growth?

The answer is a resounding “no” according to three prominent mortgage brokers and the industry’s peak body.

David French (pictured above left), co-founder of The Happy Finance Company, said these “normal fluctuations” were to be expected.

“To increase market share, brokers just need to keep doing the same thing that got us to this level, which is to provide exceptional customer service and giving clients choice and expert advice,” said French, whose brokerage is a finalist (excellence awardee) in the Bankwest New Brokerage of the Year award at this year’s Australian Mortgage Awards (AMAs).

Chris Bates (pictured above centre left), director of Blusk, agreed saying that while the data showed some stagnation in the short term, it was the long term trend that mattered.

“I don't see it as a concern because life rarely follows a straight linear path,” Bates said. “I have friends in the industry who have been struggling since the market share was as low as 2%,” said Bates, who is also an excellence awardee for the FBAA Broker of the Year – Residential award at the AMAs.

Looking back, the trend has generally only followed one direction. In 2018, broker market share was 53.9% while 10 years ago it was only 44.9%, according to the MFAA.

MFAA CEO Anja Pannek (pictured above centre right) said to see it at over 67% was a result that brokers “can be proud of”.

“The trajectory of mortgage broker market share is one that has been well earned through mortgage brokers’ dedication to their clients and the professional manner in which the industry has implemented reforms, particularly the Best Interests Duty which has only served to strengthen the confidence borrowers have in their broker,” Pannek said.

Why has mortgage broker market share stagnated?

While the sentiment remains high, there is no denying that mortgage brokers muscling in on the banks’ market share has stalled.

During the June 2023 quarter, mortgage brokers settled $88.62 billion in home loans – year-on-year this represents a 7.8% decrease from the $96.08 billion settled in the June 2022 quarter.

Bates said this was largely driven by current market conditions, which had seen borrowers battle rising rates and tactics from lenders amid a refinancing boom.

"Brokers are facing challenges in refinancing due to strong retention pricing by banks, which is causing clients to stay with their current lenders rather than refinancing,” Bates said.

Romesh Jayasundara (pictured above far right), senior mortgage broker for Victoria-based brokerage Reventon, said he had seen clients focused heavily on interest rates, cashbacks and seeking comparisons.

“I feel the increase in the interest rates over the last 18 months has caused doubt in clients wanting to borrow more money or increase their investment portfolio,” Jayasundara said.

However, the historic levels of refinancing may also present an opportunity for brokers to add value.

“Borrowers want to understand their options as being on low fixed rate for that long had become affordable and comfortable and understanding the current market rates can be quite daunting,” Jayasundara said.

“As this may be beneficial for the client, the difference between a good and great broker is understanding the client’s needs on a deeper level and assisting to meet those needs – this could be refinancing for the best rate, increasing their portfolio, understanding the strategy towards retirement.”

Pannek agreed, saying that mortgage brokers continued to provide essential expertise and support to homebuyers, and those refinancing.

“Indeed, our recent member survey showed that the so called ‘refinancing boom’ has brought new clients to the broker channel as fixed rate terms end and borrowers navigate their options in the current economic environment. With over one million fixed rate terms still to end this year and into 2024, this is a huge opportunity for mortgage brokers.”

How can mortgage brokers gain market share from here?

While the optimists of the industry had said the market share would be cracking 80% around about now, the latest results have solidified the fact that brokers will need to continue their efforts to get comfortably above two-thirds of the market again.

French said mortgage brokers were well positioned to benefit from the increase of customers looking for a better option with their home loan.

“We are seeing an increase in business volume from customers reaching out looking for more choices,” French said.  “By utilising technology, AI and pro-active client reviews we are able to help with retention and providing expert advice to both new and existing clients.”

Bates said with more brokers entering the industry than ever before, reaching over 19,000 in March, brokers would continue to excel.

“When people make significant property decisions, they prefer not to work directly with banks or online lenders. They want someone they can trust, a guide through the process, and multiple options,” Bates said.

"As soon as the property market picks up again, especially with first-time buyers and investors returning, you'll see the broker share continue to grow. The broking industry is built on a real value proposition. As purchases increase and the market changes, brokers will remain competitive."

Taking a chunk out of the direct market

While it’s easy to think that the trajectory of market share growth will continue, it’s also important for brokers to focus on a specific area of the direct market to make inroads.

Bates said brokers should view digital banks and online platforms as their competitors and strive to bridge the gap by enhancing their customer experience through technology.

“To stay competitive, brokers need to focus on improving their customer experience and embracing technology. We already beat them on advice but it’s time to beat them by driving efficient, tech-driven services.

"Our meetings are virtual, and we leverage technologies like DocuSign for document signing. We're making significant investments in digitising our services to enhance the customer experience."

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