Mortgage brokers making banks 'very uncomfortable', says research head

by Calida Smylie15 May 2014
Australia’s mortgage and housing industry is well into a two-year growth stage, but the problem is how can mortgage brokers harness its potential, RP Data research head Tim Lawless said.
Lawless, who spoke at the MFAA national conference yesterday, said the housing market is relatively healthy and safe but is starting to see the first signs of slowing.
Residential real estate is worth $5.4 trillion, roughly three times the value of superannuation ($1.8 trillion) and Australian listed stocks ($1.5 trillion)
Dwelling values have been on a growth path since June 2012, and over 10 years have grown at about 4% per annum – however this will not be sustained, said Lawless.
The important thing for mortgage brokers to do is concentrate on local market growth rather than national growth as there is a marked difference across the country, and focus on using tools to harness the market, he said.
“The gross value of house and unit sales was $246 billion in the year to March. The commission pool is at record levels.
“Hopefully brokers are harnessing the absolute power of the market place. Are you growing business? It comes back to being smarter about your business and utilizing all tools that are available.”
However, Lawless flagged something he said would likely make the banks uncomfortable.
“Mortgage brokers out-perform on conversion, capturing a higher share of settlements on new loan applications. They make up 38% of new applications, but what probably makes banks uncomfortable is that brokers’ share of settlements is climbing – so its 50-50 now.
“Mortgage brokers are making up less than 40% of applications but large amount of conversions. 
“It’s a trend banks are very much aware of and are going to be more competitive.”
To stay on top, Lawless recommends brokers stay mobile and invest in mobile technology.
“Banks going to focus on bringing that market share into their favour, because of costs involved in the broking sector.”


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  • by mac 15/05/2014 10:43:17 AM

    Agree except for the costs bit. Many outsiders assume because lenders pay commissions we therefore must be more expensive but is that actually true? If they didn't have broker business and they wanted the same amount of settlements wouldn't they need twice as many staff. Think of all those add on costs. You could also imagine what would happen in boom and lean times if the lenders had to carry twice as many loan writing staff as well. Contestant fiddling with staffing numbers to reduce costs and then hiring to handle volume surges. All in all the broker channel is much more effective / easy for them to manage. With comms only paid on settled deals and claw backs its a no brainer for them. Except for loss of power of course.