MFAA data for the six months from 1 October 2019 to 31 March 2020 has yielded mixed results, both highlighting the excellent level of service provided by brokers while also reflecting the significant challenges that occurred over the period.
Mortgage brokers facilitated 52.1% of all new residential mortgages in the in the March quarter, down from 55.3% in the December 2019 quarter. According to MFAA CEO Mike Felton, this market share result is “inconsistent with multiple indicators pointing to an exceptional broker performance” during the reporting period.
However, given the presence of record low interest rates and easing lending conditions, brokers seemed to be handling more deals – and doing so more efficiently.
“The broker channel settled $98.71bn in residential home loans for the six-month period, the highest October to March value recorded since the MFAA commenced reporting in 2015, up 12.7% year-on-year,” Felton said.
“Through the six-month period, the average number of applications lodged per active broker jumped from 16 to 19.6, while the national average value of home loans settled per broker rose above $6 million for the first time in over three years.”
Notably, the broker population has continued to shrink, a dynamic Felton attributed to the increased attention the industry has received, paired with the additional regulation soon to be introduced.
“Having reached a peak of 17,040 brokers in the September 2018 period, the broker population has contracted for the third consecutive period to 16,389 brokers,” said Felton.
“This reduction coincides with a period of increased industry scrutiny and new legislation, which has resulted in an apparent trimming down of inactive and less productive brokers.”
The MFAA’s Industry Intelligence Service Report (IIS) also addressed broker remuneration over the period.
“While average trail commission increased marginally compared to the previous year, upfront commissions grew by a significant 16.15%, reaching $78,462 for the period. This helped to achieve a healthy national average combined remuneration per broker of $141,329,” said Felton.
The MFAA CEO summarised the October to March period as being “a more positive time for the mortgage broking industry”.
“However, it is important to note that this period immediately preceded perhaps the biggest event of economic and social disruption in the past 30 years in COVID-19, the full impact of which on the mortgage and finance broking industry remains to be seen,” Felton said.