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Borrowers coming through brokers are better informed, the chief executive of a national marketplace for buyer’s agents has said, flagging that broker market share will continue to rise.
Doron Peleg, the CEO of BuyersBuyers, has noted the continuing rise of broker market share and highlighted the value that brokers provide borrowers.
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Noting that recent Mortgage & Finance Association of Australia (MFAA) statistics show that more than two-thirds of new mortgages are written by brokers, Mr Peleg said that this was a continuation of a multi-decade trend and will continue into the future.
Mr Peleg commented: “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.
“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 climate, and 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.”
Similarly, Pete Wargent, the co-founder of BuyersBuyers said the buyer’s agency was seeing more customers than ever coming from mortgage brokers.
He added: “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.
“Great consumer awareness and education can only be a good thing for financial stability and the housing market in general.
“We’re constantly building affiliations with mortgage brokers and broking groups precisely for this reason. 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.”
The CEO noted that given that mortgage brokers are now operating with a best interests duty, as well as the fact that they are “offering more choice and consumer convenience,” he has “even more confidence that mortgage broker market share will continue to rise”.
“This is all the more reason for us to keep building affiliations in the mortgage broking space,” Mr Peleg said.
Customer satisfaction has also remained high in the third-party channel, with recent data from the Finance Brokers Association of Australia (FBAA) showing that 98.3 per cent of broker clients believed their broker had acted in their best interests (even before the legal requirement came into force on 1 January 2021), and that nearly 99 per cent of clients said they would use a broker again in future.
When asked about whether they had any concerns relating to how brokers were paid, 93.8 per cent said they had no concern about commissions.
The survey also revealed that the main reason cited by FBAA broker clients for choosing a mortgage broker for their next home loan was “I believe a mortgage broker will have my best interests at heart” (33.2 per cent), followed by “I have an existing relationship with a mortgage broker” (20.7 per cent).
The FBAA has now sent the submission to politicians in both government and the opposition, as well as to regulators, the Council of Financial Regulators, the competition watchdog, banking associations and other “relevant decision-makers” to help provide “up-to-date evidence” on attitudes to broker remuneration ahead of the 2022 broker remuneration review.
The review is set to be undertaken by the Council of Financial Regulators and the ACCC (as announced by Treasurer Josh Frydenberg in 2019) and will consider the impact of the best interests duty, the possible ramifications of removing trail, as well as the feasibility of continuing upfront commission payments.
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