Australia’s mortgage market is heating up, placing brokers under pressure to up their game.
In the case of National Australia Bank (NAB), the major continues to solidify its proprietary lending capabilities with the addition of roughly 150 new proprietary home lenders in 2025's first half. The move underscores the bank's plans to grow its direct channels while reducing reliance on third-party brokers.
The major released its fiscal year 2025 first half results Wednesday, beating expectations and walking away with a $3.58 billion cash profit — an increase of 1%, compared with the same period in 2024.
The growth was driven by business lending and customer deposits, as well as growth in SME lending. Housing lending, up 3.2%, while business and private banking lending in housing increased 4.0%, year-over-year.
"NAB is tracking in the right direction," said Andrew Irvine, NAB chief executive officer.
He added that "unpredictability and volatility will persist for a while yet" as a result of continued global headwinds. "But overall Australia entered this period in good shape."
The results, however, are a mixed bag for mortgage holders and mortgage brokers. Borrowers benefit from an increasingly competitive lending environment by way of lower rates.
Meanwhile, broker share in Australia continues to rise. In March, the Mortgage & Finance Association of Australia (MFAA), revealed new data, showing that approximately 76% of borrowers Down Under use a mortgage broker to settle residential mortgage loans.
But NAB's increased focus on its own direct lending channels reduces reliance on third-party mortgage brokers. The bank's long-term growth strategy, which Irvine listed among the bank's "key priorities," includes "improving proprietary lending and growing business banking."
So far the results speak for themselves. In the six months leading up to March, home lending drawdowns by way of NAB's proprietary channels increased 25%.
This shift in strategy also signals concerns over profitability in the broker channel.
While top-line results improved in the first half, in the personal banking division, which includes mortgages, cash earnings fell 6.8% in the first half, year-over-year.
At the same time, NAB's broker-originated mortgage loans fell 8% to 59.6%, down from 64.9%, during 2024's first half. That's on top of a 3.8% drop the year before. Conversely, loans originated through NAB’s proprietary channels continued to rise. The bank also reported a 32% increase in the personal banking division's branch originated sales during the period, year-over-year.
Adam Brown, NAB executive, broker distribution, told Australian Broker that "NAB continues to invest in both our broker and proprietary channels to drive growth, ensuring a balanced focus on both.
“Brokers are essential to bringing the best of NAB to our customers, and we’re committed to strengthening these relationships," he continued. "We aim to be the bank of choice for both broker-assisted and direct customers by investing in our proprietary franchise as well. This isn’t about choosing between proprietary and broker channels — it’s about being great in both. We remain here to support our brokers as we always have.”
But some industry insiders say the move by NAB is an unfair tactic.
"Any of the banks that are moving away from the broker distribution channel, which has helped them build their portfolios, is a bit of a low act," Peter White, managing director of the Finance Brokers Association of Australasia (FBAA), told Australian Broker.
"The broking industry supported these majors for quite a long time now," he continued. "Maybe they need to look at how they redistribute their product. The broker channel is a much more cost-effective method of distributing mortgages. And the benefit in using a broker, of course, is that the broker can act in the best interest of their client, whereas a banker can't. [The bank] can only recommend the product they had before them, which may or may not be in the best interest of the client."
Brokers should be aware that NAB's net interest margin in the retail bank decreased from 1.77% to 1.72% over the past year, primarily due to competitive pressures in housing lending. This trend may impact the bank's willingness to offer competitive commissions to brokers.
In addition, brokers should consider diversifying lender relationships, given NAB's increasing focus on proprietary channels, in an effort to ensure a steady stream of business.
Brokers should also continue to look at all options in the market, White said.
"Don't go into this thinking it's only a major bank that can help," he explained. "Look at the options that are all in the best interest of the client, and then recommend that. It may be a major bank. But it may well not be."
