Gross commissions also fall
With 29.8% of the national population of brokers calling Victoria home, its brokers were responsible for settling 29.9% of the national value of home loans, according to the latest research from the MFAA.
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, revealed Victorian brokers settled $48.36 billion in home loans compared to $51.81 billion during the equivalent 2021–22 period, down 6.7%.
However, the garden state’s overall home loan book grew year-on-year, up by 10.69%, from $245.20 billion to $271.41 billion.
On an individual basis, the MFAA Industry Intelligence Service report showed that the average broker settled $8.38 million in home loans for the period, down 10.66% year-on-year, from $9.38 million.
The MFAA report showed Victorian mortgage brokers earned an average annual gross up-front commission of $108,901, compared to $121,881 the previous year, and $70,521 gross trail for the most recent period, compared to $66,559, for a combined gross commission of $179,422. In total, this was down by 4.79%.
The MFAA data also showed that more mortgage brokers have joined the sector in Victoria.
The population of 5,773 brokers for the period was up compared to 5,526 a year ago, lodging an average 17.3 loans which equates to a total of 99,631 loans lodged for the state, for the period, down 8.92% compared to the year before when it was 109,388.
This compares to the broker population in NSW and the ACT, which boasts 7,174 brokers, up from 6,782 compared to the previous year. Victoria has the second highest percentage of brokers hailing from the state at 29.8%, compared to 37% of all brokers calling NSW and the ACT home.
Victorian brokers not surprised by job’s appeal
Mortgage broker Adam Piper (pictured above left) from Melbourne-based Axton Finance, said he was not surprised that there had been an increasing number of finance professionals drawn to the mortgage broking sector.
“Before becoming a broker, I previously worked as a home loan lender directly for a bank where I often felt like I was trying to push a square peg through a round hole,” Piper said.
“Working as a mortgage broking professional has given me the ability to provide tailored solutions to a much vaster range of finance solutions, and as such I have found it a much more attractive space to work in.”
Piper said as banks increased their level of automation, it highlighted the reality that technology was not able to replace personalised relationships. He said it was becoming very apparent that customers craved the personal touch an experienced broker provided.
Piper said the fact that more than 70% of mortgages were written by brokers was a testament to the growing importance of the sector.
“The increasing lack of time that clients have further leads customers to seek out a broker to assist them with their finance needs as we effectively represent the department store of mortgages, making the broking occupation increasingly attractive as market share increases.
“I expect this to continue to be the case as market conditions improve in the next 12 to 18 months hopefully.”
Population growth push broker numbers
Piper said statistics indicated that Victoria was due to surpass Sydney in population in the coming years so it stood to reason that the broking sector and property market would continue to flourish in Victoria in 2024.
“The introduction of government schemes to assist first home buyers enter the market, paired with the 1% assessment rate being offered by some lenders on refinance applications, has enabled brokers to continue to provide more solutions to boxed-in clients,” he said.
Piper said some of the initiatives being offered were much needed after the negative impact on serviceability caused by the run of rate rises over the past 18 months, paired with the increased general costs of living.
He said as inflationary pressures began to ease and economists forecast potential rate cuts in late 2024 or early 2025, both the property market and consumer confidence should thrive nationally making for a busy year ahead.
MFAA report reinforces member feedback
MFAA CEO Anja Pannek (pictured above right) said the report reinforced feedback from members on the impact interest rate rises and record levels of refinancing were 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, Ms Pannek noted that despite this fall the broker channel outperformed the overall home loan lending market.
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