Almost two-thirds of borrowers use mortgage brokers

As competition ramps up within the lending space, more buyers are seeking the services of mortgage brokers to help them fully understand their options. 

Mortgage brokers accounted for almost 67 per cent of mortgages written last quarter, according to the latest figures from the Mortgage & Finance Association of Australia (MFAA).

The result is 6.8 per cent higher than the previous record of 60.1 per cent market share achieved in the September 2020 quarter, and a 12 per cent increase from the 54.9 per cent achieved in the September 2019 quarter.

The total value of mortgages settled through brokers saw the largest quarter-on-quarter and year-on-year increases since reporting began.

A record high of $93.42 billion in loans were settled in the September quarter, representing a 62.5 per cent year-on-year increase on the $57.47 billion settled in the same quarter in 2020, and a 20 per cent increase on the previous record of $77.75 billion set in the June 2021 quarter.

MFAA Chief Executive Officer Mike Felton said the results were the result of ongoing referrals from satisfied customers, demonstrating that mortgage broker customers are benefiting from both the service their broker is providing, and the positive policy changes made across the sector.

“This market share is appropriate recognition of an industry that has implemented significant reforms which continue to drive consumer trust and confidence in the mortgage broking sector,” Mr Felton said.

“Not only do mortgage brokers provide consumers with choice, experience and convenience, they now provide an unrivalled Best Interests Duty, which further differentiates our channel and provides yet another compelling reason to use the services of a mortgage broker.

“What makes this result even more remarkable is that it coincided with extended periods of lockdown in NSW, Victoria and other states.”

Doron Peleg, Chief Executive Officer of BuyersBuyers, said the rise in the number of buyers using mortgage brokers was a continuation of a multi-decade trend.

“The advent of the internet and mortgage aggregators really helped to accelerate the use of mortgage brokers, helping consumers to understand the full array of choice in the mortgage market,” Mr Peleg said. 

“There’s been fierce competition in the lending space, and it makes perfect sense for borrowers to get a mortgage expert on their side.”

Based on the current client, Mr Peleg said the number of people using mortgage brokers was likely to increase.

“While recognising that the quarterly numbers will inevitably bounce around, there’s absolutely no reason to expect that brokers can’t account for 70 per cent or more of the mortgage market in the coming few years,” Mr Peleg said.

Consumer education

Co-founder of BuyersBuyers, Pete Wargent, said the buyer’s agency was seeing more customers than ever coming from mortgage brokers.

“It works best for us because customers are coming to us better informed, with a greater awareness of their likely strategy, the buffers they need to keep in place, and the possible trajectory of interest rates,” Mr Wargent said. 

“Great consumer awareness and education can only be a good thing for financial stability and the housing market in general.

“It’s also a win-win because by engaging a buyer’s agent, we consistently help clients to buy with less time, cost, and stress, and in doing so will invariably increase the conversion rate of mortgage pre-approvals into actual home loans.”

Variable rates back in vogue

Mr Peleg said there had been record interest in fixed-rate mortgages in 2021, but with the landscape for lenders now changing, he expected to see more variable-rate mortgages written in 2022.

“Investors, in particular, like to have flexibility these days, and we’ve seen a sizeable increase in investor clients using offset accounts and redraw facilities,” he said. 

“This year was the year of the first homebuyer and upgraders, but we expect investors to be much more active in 2022.

“Mortgage rates may rise, but you’ve got to look at it in context – they are rising from record low levels.

“Mortgage brokers are now operating with a best interest duty as well as offering more choice and consumer convenience, which gives me even more confidence that mortgage broker market share will continue to rise.”

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Nicole Madigan

Nicole Madigan is a freelance journalist for Elite Agent.