Mortgage Brokers Slow Down
Sydney Morning Herald
Monday February 17, 2003
Tougher home lending conditions look to have curtailed the growth in mortgage broking in the second half of last year despite acceptance by the big banks and evidence that some brokers are still seeing robust loan volumes.
Broker loan growth slowed to 1 per cent in the September quarter and the number of brokers, a hotchpotch of specialists, real estate agents, lawyers and accountants, fell by 72 to 550.
According to a survey by the Market Intelligence Research Centre, the results could point to big banks being more selective in their use of brokers and narrowing the number of brokers they use, aiding the sector's rationalisation.
But the slowing growth contrasts with December home loans approval figures, released on Friday, that showed a defiant 3.8 per cent rise, the biggest increase in 18 months. Economists said the figures provided evidence that the housing market could be in for a ``soft landing".
The fall in broking growth rate from double-digits in previous periods could suggest a maturing of the channel brokers are estimated to originate around 30 per cent of all loans, the balance being bank branches, mobile lenders and other originators or reflect a slowdown in the total home loan market.
Brokers are paid a fee by the lender and advise borrowers on the best loan from a panel of different products offered by these different lenders. This is distinct from the 1990s phenomenon of non-bank mortgage originators, who fund and market their own loans.
A spokesman for Mortgage Choice, Warren O'Rourke, said the group had the largest volumes of any broker in the quarter surveyed. He believed the group was taking market share from smaller brokers.
He said that after a record year of home lending across the market in 2001-02, the company had factored in a 10 per cent reduction for this year.
But the group's January volumes, for instance, were 22 per cent more than for the same period last year.
Commonwealth Bank noted in its half-yearly results last week that despite its late acceptance of broking as a means of distribution, loans distributed through brokers now represented 15 per cent of its loans, compared to 11 per cent at the end of December 2001.
The MISC does not take into account the impact of Aussie Home Loans, which moved into the market in the final quarter of last year to supplement its traditional origination activities, and does not include figures for one of the largest broker networks, AFG. It is also understood that ANZ, one of the more aggressive banks exploiting the broker channel, did not participate in the survey. If there was any resurgence in ANZ's market share, this may have dampened the growth figures reported.
© 2003 Sydney Morning Herald
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