Risk of saturation in NSW and Victoria as broker numbers surge ahead of lending growth, new MFAA report reveals
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Risk of saturation in NSW and Victoria as broker numbers surge ahead of lending growth, new MFAA report reveals
Broker numbers grew by 6.4% in the six months to September 2016, whilst the value of new loans grew by just 1.1%, according to the MFAA’s latest Industry Intelligence Service Report.
The IIS found that in New South Wales the market actually contracted, by 4%, whilst broker numbers grew by 5.5%. In Victoria lending grew by 1.7% but the number of brokers increased by 7.5%. Growth in lending was concentrated on Tasmania (17.9%), South Australia (9.8%) and Queensland (8.3%), in the latter two cases outpacing the growth in brokers.
Over the period of study, from April to September, the share of loans written by brokers actually fell from 53.7% to 53.6%
The MFAA’s findings suggest broker-broker competition in NSW and Victoria is set to increase. Over the period of study, from April to September, the share of loans written by brokers actually fell from 53.7% to 53.6%, indicating new brokers entering the market may not be able to simply take market share from banks. Overall Australia now has almost 16,000 brokers.
Brokers are already being hit by such competition, the IIS data suggests, as 18% of brokers failed to settle a single loan in the six-month period, up 2% on the preceding six months. Presenting the results to brokers, MFAA head of marketing & communications Stephen Hale commented that: “I must admit that is something that certainly would be concerning. When you’re heading towards one in five not settling a loan, we’d have to ask ‘Why is that happening?’”
Hale suggested the result could be due to new-to-industry brokers who were yet to perform as well as experienced living off trail commission. In a separate finding, the MFAA reported that conversion rate for new loans had fallen by 7% and was now on average 73%, driven by conservative lending policies and more inexperienced brokers entering the market. Furthermore, the rate of broker turnover now stands at 8.6%.
More encouragingly, the number of female brokers is growing faster than that of male brokers, at 8.7%, suggesting broking is moving towards a more even gender balance. At present women make up 28% of the industry.
Broker numbers grew by 6.4% in the six months to September 2016, whilst the value of new loans grew by just 1.1%, according to the MFAA’s latest Industry Intelligence Service Report.
The IIS found that in New South Wales the market actually contracted, by 4%, whilst broker numbers grew by 5.5%. In Victoria lending grew by 1.7% but the number of brokers increased by 7.5%. Growth in lending was concentrated on Tasmania (17.9%), South Australia (9.8%) and Queensland (8.3%), in the latter two cases outpacing the growth in brokers.
Over the period of study, from April to September, the share of loans written by brokers actually fell from 53.7% to 53.6%
The MFAA’s findings suggest broker-broker competition in NSW and Victoria is set to increase. Over the period of study, from April to September, the share of loans written by brokers actually fell from 53.7% to 53.6%, indicating new brokers entering the market may not be able to simply take market share from banks. Overall Australia now has almost 16,000 brokers.
Brokers are already being hit by such competition, the IIS data suggests, as 18% of brokers failed to settle a single loan in the six-month period, up 2% on the preceding six months. Presenting the results to brokers, MFAA head of marketing & communications Stephen Hale commented that: “I must admit that is something that certainly would be concerning. When you’re heading towards one in five not settling a loan, we’d have to ask ‘Why is that happening?’”
Hale suggested the result could be due to new-to-industry brokers who were yet to perform as well as experienced living off trail commission. In a separate finding, the MFAA reported that conversion rate for new loans had fallen by 7% and was now on average 73%, driven by conservative lending policies and more inexperienced brokers entering the market. Furthermore, the rate of broker turnover now stands at 8.6%.
More encouragingly, the number of female brokers is growing faster than that of male brokers, at 8.7%, suggesting broking is moving towards a more even gender balance. At present women make up 28% of the industry.
