Find out how many the state has…
More mortgage brokers are entering the South Australian market although the number of loans they settled was down when compared to the same time a year ago according to the latest research from the MFAA.
According to the MFAA’s 16th edition of its industry intelligence service report, which covers the six-month period from October 1, 2022, to March 31, 2023, South Australian brokers settled $9.46 billion in home loans compared to $9.52 billion during the equivalent 2021–22 period, down 0.6%.
However, there was an increase in the value of the state’s overall home loan book, up 8.71%, or $4.50 billion, to $56.17 billion.
Brokers numbers up in South Australia
Adelaide-based mortgage broker Daniel Fulton (pictured above, left), from Samuel Finance, said he’s not surprised more brokers have joined the South Australian mortgage broking sector with the number of brokers for the period sitting at 1,193 compared to 1,144 the year before.
From October 1, 2022, to March 31, 2023, brokers lodged on average 24.3 loans - this equates to a total of 28,979 loans lodged for the state for the period, down 6.85% compared to a year ago, at 31,110.
Fulton said being a broker is challenging yet rewarding so it’s not surprising that more professionals are entering the industry.
“The value a mortgage broker can offer to a client is both measurable and impactful,” Fulton said.
“From helping a first home buyer understand the property and finance landscape, to re-structuring an investor’s portfolio to optimise their strategy, each day is a new challenge and opportunity.”
Fulton said with approximately 70% of loans being originated from the broker channel this is a testament to the broker value proposition as well as the trust and reliance clients place on brokers.
“With interest rates having risen sharply throughout 2022, the market for mortgages has become more competitive on the lending side, which has naturally driven consumers to engage brokers to shop around to ensure the customer is receiving the best product,” Fulton said.
“Lenders have moved away from cash-back driven incentive offerings which has seen policy-changes drive competition.”
Broker optimism for 2024
Fulton said despite the broader economic challenges presented by cost-of-living pressures and property price growth, the outlook for 2024 appears optimistic.
“Every client has unique circumstances to understand, and lender policy is ever-changing, requiring a personalised solution for each scenario,” Fulton said.
“Customers want to make informed decisions. Arguably the time is now more than ever to engage a broker.”
Adelaide property market buoyant
South Australia remains a popular place for home buyers and investors and Adelaide had the highest capital city growth in the last quarter of 2023 according to the latest PropTrack Home Price Index report, released this month.
Fulton said Adelaide's popularity as a residential property destination can be attributed to several factors.
“The rise in property prices nationwide has seen investors and owner occupiers from the eastern states look to South Australia as a relatively more affordable place to live and invest,” Fulton said.
“This theme is supported by the increased trend of remote work, offering greater flexibility for people able to work online.
“Adelaide has always been a great city for those wanting to be in close proximity to the CBD, our beaches and wine regions.”
Home to 6.2% of the national population of brokers, South Australian brokers settled 5.8% of the national value of home loans.
South Australian brokers earned an average annual gross up-ront commission for the period of $103,113, compared to $108,169 the previous year, and $70,630 gross trail for the period, compared to $67,752 last year, for a combined gross commission of $173,743.
In total, this was down 1.24% from a year ago.
Rate rises, refinancing impacting brokers
MFAA CEO Anja Pannek (pictured above, right) said her organisation’s report reinforces feedback from members on the impact interest rate rises and record levels of refinancing are having on brokers and their clients.
“The period covered in the report coincided with a period of intense refinancing as fixed rate mortgages reverted to variable, clients encountered serviceability constraints and a moderation of property prices in some markets,” said Ms Pannek.
“This confluence of factors can be seen in this industry research; however, the outstanding service mortgage brokers deliver to their clients has remained a constant throughout this time.”
During the period mortgage brokers maintained a strong market share, writing 69.6% of all residential home loans in the March 2023 quarter, while in the 12 months to March 2023 mortgage brokers settled a record $358.68 billion in home loans.
The report also shows that in comparison to the October 2021 – March 2022 period, the total value of loans settled by mortgage brokers declined 8.63%.
However, Pannek noted that despite this fall the broker channel outperformed the overall home loan lending market.
Speaking to MPA in June, when the MFAA released the March quarter figures, Adam Rakowski, the principal of brokerage Ortus Financial said he expected broker market share to climb towards 80% and this would be driven by people relying on brokers to find the “most suitable solution” in a market where there was a wide array of lending options.
Why draws people to become a mortgage broker? Share your thoughts below
