Broker Exodus
Mortgage brokers believe ongoing and future consumer demand for their services will prevent the big banks from having their way in driving them out of the market.
New research reveals two thirds of brokers (66.4%) believe banks are trying to squeeze them out of the industry, yet a similar proportion (63.7%) expect consumer demand for mortgage broking to grow.
However despite the seemingly positive outlook, this doesn’t mean everything is rosy right now in the world of mortgage brokers.
For the past four years CoreData has been researching brokers, listening and talking to them, and trying to understand what they are doing, how they are doing it and how happy they are?
And after a bull run over the past several years and pre-August 2007, at the moment, it seems they are largely unhappy – or at least unsettled.
In fact according to a new CoreData study of mortgage brokers almost a third of all brokers (31.4%) have considered changing their broking group over the past 12 months – a staggering figure for any industry.
Partly due to the groups they are aligned to not meeting their needs and partly due to market conditions, many brokers, it seems, are considering their options.
In fact, looking forward 13% of brokers say they will change broking groups in the next 12 months – in an industry of 16,000 that equates to more than 2,000 brokers moving groups by the end of 2009.
This suggests that while consumer demand for broking is on the rise, the current economic situation (a double whammy of the demise of the securitised market and the move by the major banks to slash commission rates to brokers) is making life tough for brokers.
Essentially, this paints a picture of an industry in flux and it seems that there is room for a significant migration of human capital either within the industry or from the industry into other professions.
While the bank brands aren’t yet popular with brokers as a destination – brokers feel they are simply giving up too much freedom to move – bank loans are.
The most popular loans in the industry are those being offered via CBA and ANZ, with each getting better than 22% of all loans.
Brokers, it appears, are fleeing to banks in times of uncertainty, despite the banks slashing remuneration rates to the brokers.
Given we’re now living in sobering times we set out to examine if there was any churn taking place, as we wanted to discover if any brokers were migrating their loans to generate revenue rather than writing new business.
We discovered something curious – that there was a reasonable amount of churn going on – but the majority of the churn that was happening was actually away from third party lenders to the banks.
One Comment on “Broker Exodus”
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Steve says:
I disagree with you comment “Brokers, it appears, are fleeing to banks in times of uncertainty, despite the banks slashing remuneration rates to the brokers.”
I wouuld say that Brokers are redirecting borrowers to banks due to interest rates being lower than the non banks and therefore Brokers are acting either in the interest of the borrower or out of fear of loosing the business to a bank. A commission although reduced is better than no commission. In regards to churn, I would say the above situation is occuring again. Non bank borrowers have received higher & more interest rates rises than borrowers of the major banks. When these borrowers become aware of the lower rates available and how this will reduce their repayments, they seek to change. A good broker who looks after their clients and sees the long term benefit in building client trust, will assist their clients in making a move. Both the consumer and the broker win. I disagree that brokers are “fleeing to the banks” due to market & economic uncertainty (fear).
Steve