Borrowing power: how mortgage brokers have changed the lending landscape

Borrowing power: how mortgage brokers have changed the lending landscape

Since the late 1980s, mortgage broking has risen from a niche industry to become a crucial part of the financial sector. Today you are more likely to have secured your home loan or refinanced a loan through a mortgage broker than direct through a lender.

Indeed, according to ‘The Value of Mortgage Broking’[1] report by Deloitte Access Economics, mortgage brokers now arrange more loans than lenders directly (55.7 per cent, in the September quarter of 2017, alone[2]). In 2016-2017 mortgage brokers contributed close to $3 billion to the Australian economy.  

Given these stats, there’s no denying the impact mortgage brokers have had on the home loan market and the financial sector. Thanks to mortgage brokers, Australian consumers have greater access to competitive mortgage prices and far greater choice and convenience. It’s this access to a wide range of lenders and products that have allowed mortgage brokers to lead the charge, driving down interest rates for all home buyers and investors.

“The mortgage broker channel has made home loan financing cheaper for all Australians,” says Mortgage & Finance Association of Australia CEO Mike Felton.

“While not only providing homebuyers with access to more residential lending options, mortgage brokers have contributed to a fall in net interest margins of more than three percentage points over the past 30 years.”

According to the Deloitte report, the average mortgage broker has access to 34 different home loan lenders, and of these they use an average of 10 lenders to settle loans based on their customer’s choice, financial circumstances, needs and preferences.

The Deloitte report found customer satisfaction was also exceptionally high when it came to mortgage brokers.  An enviable nine out of ten customers said they were satisfied with their mortgage brokers’ service3, while 70 per cent of a broker’s business came from repeat customers.

Beyond this dedication to serving their customers, the report found mortgage brokers are experienced professionals. The average broker has 13.8 years’ industry experience, which speaks to the quality of service and value that brokers provide. Sixty-four per cent of brokers have education and training above their required qualifications.

There’s little doubt the mortgage broking industry has changed significantly since its genesis in the 1980s.

Initially, mortgage brokers primarily provided price comparison services and drafted loan applications. Brokers were often used by regional banks and non-bank lenders to help expand their market share and geographic diversification.

That all changed in 1992 when Aussie Home Loans entered the lending market.  Australia’s first non-bank lender, Aussie introduced the securitisation of home loans, offered ‘obligation-free home visits by professional loan consultants’, alongside very competitive lending rates. This, together with the establishment of mortgage broking companies over the next few years, caused a shift in distribution channels used by lenders from branch networks to brokers.

It’s a shift that has gone from strength to strength to this day.

“For over a quarter of a century mortgage brokers have been driving competition in Australian home lending,” explains Aussie Home Loans’ founder John Symond in the Deloitte report.

“Aussie started this revolution and together with new entrants, we’ve created a mortgage market that’s more competitive than I’ve ever seen. Borrowers today have superior choice, service and education,” Symond concludes.

Find out more about Mortgage Broker opportunities with Aussie Home Loans

[2]  The estimate is based on a CoreLogic survey of the largest brokers and aggregators that account for around 95% of broker- introduced loans
3  Deloitte (2016). Customer experiences of using mortgage brokers.


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