Fall in average income to $133,500 p.a. due to surge in new brokers in a barely growing market, warns MFAA report
Fall in average income to $133,500 p.a. due to surge in new brokers in a barely growing market, warns MFAA report
Average broker earnings fell by 6% to $133,500 per annum before costs, according to a new report by the MFAA.
The MFAA Industry Intelligence Service looked at brokers over the six months from October 2016 to March 2017, a period when the number of brokers rose to 16,009, a new record.
Yet whilst broker numbers increased by 3.3% in six months, the number of loans written increased by just 0.1%.
MFAA CEO Mike Felton called the results strong, in the context of investor and interest-only changes, he also called for caution. “It is not a sustainable trend to have broker numbers continually rising faster than the value of new business written and could be part of the reason why the report shows the average income for brokers is down 6% nationally.
“When the pie stays the same size and there’s more mouths to feed, the slices inevitably get smaller.”
Broker market share is barely rising
Whilst many brokers assume the market for home loans continues to grow, the reality is more complicated.
Property prices are rising, but the broker’s share is onnly rising slowly. Broker’s market share hit a record 55.7% in the September quarter but was largely flat between 2014-16.
On average, broker productivity is falling, with the number of loans settled falling 2.5% on the previous six months. 17% of brokers did not settle a loan in the entire six months; almost half of all brokers (45%) were unable to settle more than $2m.
The findings build on previous IIS reports in suggesting that broking as a profession is in danger of saturation.
State-by-state
Nowhere better illustrates the challenges facing broking than South Australia, where the number of brokers rose 3.7%, above the national average, whilst the value of loans plunged 8.1%.
However, SA brokers are also the most productive in the nation, writing 22 loans over six months on average. The least productive were the NT (11), NSW (15) and WA (15).
According to the IIS report, “this key measure of sales productivity has fallen in every state and territory, with particularly weak results returned for New South Wales and Western Australia, both barometers for the health of the broker sector at the state level."
Average broker earnings fell by 6% to $133,500 per annum before costs, according to a new report by the MFAA.
The MFAA Industry Intelligence Service looked at brokers over the six months from October 2016 to March 2017, a period when the number of brokers rose to 16,009, a new record.
Yet whilst broker numbers increased by 3.3% in six months, the number of loans written increased by just 0.1%.
MFAA CEO Mike Felton called the results strong, in the context of investor and interest-only changes, he also called for caution. “It is not a sustainable trend to have broker numbers continually rising faster than the value of new business written and could be part of the reason why the report shows the average income for brokers is down 6% nationally.
“When the pie stays the same size and there’s more mouths to feed, the slices inevitably get smaller.”
Broker market share is barely rising
Whilst many brokers assume the market for home loans continues to grow, the reality is more complicated.
Property prices are rising, but the broker’s share is onnly rising slowly. Broker’s market share hit a record 55.7% in the September quarter but was largely flat between 2014-16.
On average, broker productivity is falling, with the number of loans settled falling 2.5% on the previous six months. 17% of brokers did not settle a loan in the entire six months; almost half of all brokers (45%) were unable to settle more than $2m.
The findings build on previous IIS reports in suggesting that broking as a profession is in danger of saturation.
State-by-state
Nowhere better illustrates the challenges facing broking than South Australia, where the number of brokers rose 3.7%, above the national average, whilst the value of loans plunged 8.1%.
However, SA brokers are also the most productive in the nation, writing 22 loans over six months on average. The least productive were the NT (11), NSW (15) and WA (15).
According to the IIS report, “this key measure of sales productivity has fallen in every state and territory, with particularly weak results returned for New South Wales and Western Australia, both barometers for the health of the broker sector at the state level."
