Industry report shines light on sector figures

by Rebecca Pike31 Oct 2018

The number of residential brokers also offering commercial finance has more than doubled in the last two years.

These figures come from the latest Mortgage and Finance Association of Australia (MFAA) industry report, which has also revealed a continuous drop in the proportion of female mortgage brokers since 2016.

The report, which is the sixth one, covers the quarterly period of January to March 2018 as well as the six monthly period of October 2017 to March 2018.

It also includes other figures such as broker remuneration, the number of brokers per person and the number and value of loans settled.

A snapshot of areas included in the report are listed in sections below.

Previous reports have used data from 14 aggregators, but only 13 participated in this most recent report. 

The market share has continued to grow, with brokers now accounting for more than 55% of all loans originated for the January to March 2018 quarter. 

In terms of submitting loans to lenders other than the four major banks or its affiliates, this market share rose to 30.2% for the six months to March.

The total value of lending directed to these lenders also hit a record high of $15.1billion for the latest quarter.

MFAA CEO Mike Felton said, “Our IIS Reports are an important set of data for the industry, in order to quantifiably demonstrate the economic value of the services that brokers deliver. The latest findings reinforce the value proposition of mortgage brokers, creating choice and competition in the mortgage market by placing business with a wide set of lenders, many of which do not have a branch network."

Felton also addressed the drop in female brokers. He said, “Another key finding that needs highlighting, as it's an industry-wide issue, is that the proportion of female mortgage brokers has once again dropped, now at 27.1%.

"We, as an association, are well progressed on an industry-wide initiative, in conjunction with our industry partners, to look at solutions to promote the broker profession as a career for women. This report will be released at the end of November,."

 

Diversification

Since the report in October 2015 to March 2016, the number of residential brokers selling commercial finance products increased by 124%, from 1,641 to 3,668.

It grew by 25% just in this six month period alone and commercial loan settlements increased to just under $9billion during the six months to the end March 2018.

The executive summary of the report said, “This suggests that residential mortgage brokers appreciate the importance of diversification as a means of growing their business, or insulating their businesses from industry change or market corrections.”

At the state level, the number has grown across all major states. Since the 2015 – 2016 report, the number of diversified broker in Queensland has increased by 162% from 274 brokers to 719 brokers. In New South Wales, the number of brokers jumped from 461 to 1,121, an increase of 143%.

Another big jump was the figures in Victoria, which saw residential brokers offering commercial finance rise from 532 to 1,028, an increase of 93%.

 

Gender gap

The proportion of female brokers to male brokers has dropped consistently since the report in April 2016 – September 2016.

While the number of female brokers has increased since 2016, the most recent period showed 92 fewer female brokers since the period before.

The figures also show a decline in recruitment of women since 2016 and a decline in the proportion of women recruited.

In April – September 2016, 66% of those recruited were men (931) and 34% were women (476). Over the following year, the figures dipped to 68% men and 32% women.

It dropped even further in the period Oct 16 to March 17, with 72% men (938) and 28% women (360). But in the period following recruitment saw its highest numbers yet, with a 3% increase for the proportion of women: 69% men (1168) and 31% women (523).

Although recruitment figures have dropped in the most recent period, the proportion has stayed the same.

 

Loans settled

According to the report, the last twelve months was the strongest ever for home loan settlements in the sector, although the six months to March was slightly lower than the previous six months.

Brokers settled $97.63 billion in loans between Oct 17 and March 18, down by 2.3% on the last reporting period. 

Looking at the year ending in March 2018, brokers settled $199.5b of home loans, the highest amount on record. It was a 4.4% increase over the results for the prior year-to-end of March 2017.

The national average value of home loans settled per broker has continued to decline since April 2015. The net decline over the last five six-month periods has been 15.8%, from $6.9million to $5.8million per broker.

The number of home loans applied for has decreased over the last three half-year periods, since April - Sept 2016.

The number of home loans settled per state shows that Victoria has now overtaken NSW. New South Wales and ACT contributed most to the national decline in number of applications, down 2,529 applications, or nearly 3%, compared to last period.

The conversion rate of applied for loans to settled loans declined slightly since last survey from 75.6% to 72.1%, having increased from the preceding survey.

Potential factors contributing to this may include adjustments to lending assessment criteria and the ability for brokers to channel business to a wider range of lenders.

Approximately 2,180 brokers did not settle a home loan during the reported six-month period.

 

Broker population

The number of brokers only decreased very slightly, but as this is the first time the numbers have gone down it is thought to be due to the lack of the missing aggregator's data. The MFAA estimated that if the data had been included there would have been an increase of 2%.

Tasmania's broker population has grown the most, by 35%, followed by Victoria with 29% growth and then NSW and ACT with 24.8%. The only area to decrease broker population was the Northern Territory, with a drop of 9.8%.

The report also shows the national average number of Australians per mortgage broker has increased compared with the last six months from 1,452 to 1,475 to one. The association puts this down to a plateauing number of brokers but a rising Australian population.

Tasmania has the most number of Australians per broker, with 4,131 people for every one broker, followed by the Northern Territory, which has 3,334 people per broker. 

Western Australia has the least number of people per broker, with one broker per 880 people.

 

Remuneration

Nationally, there is little change in the estimated combined average upfront and trail remuneration compared to the previous report, from $132,800 in April-September 2017, to $132,793 in October 2017 - March 2018.

Looking only at upfront commission, the average gross upfront remuneration per broker for this period, before costs, was $75,604, compared to $76,715 for the April-to-September 2017 period.

While it has declined nationally, there are more specific state details. According to the report, NSW and ACT’s average upfront commission declined by nearly $5,800, or 6.5%, from $88,570 in April-September 2017 to $82,787 this period. On the other hand, Victoria’s rose by just over $4,700, or 6.1%, from $77,855 the prior period, to $82,601 this period.

Trail commission has risen nationally by 1.9% to an average $57,189 and state-by-state the averages have remained stable, apart from South Australia where averages dropped by $4000, but is now in line with the national average. Tasmania also saw a drop of 6.6%, from $40,659 to $43,354.

Western Australia’s gross trail commission, at $68,165 is the nation’s largest.