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For the first time in 15 months, more brokers are using the big four banks than non-majors, according to a new survey.
Analysis of the latest monthly Broker Pulse survey from Agile Market Intelligence has revealed that more brokers are writing major bank deals.
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The findings are based on a survey of 294 brokers conducted between 1 and 16 November 2023 that sought to uncover their experiences using lenders during the month of October.
It found that 81 per cent of brokers said they had used a major bank for their clients in October, compared to 79 per cent who used a non-major bank.
This is the first time since July 2022 that the usage of the major banks has outpaced that of the non-major banks (when it was 80 per cent and 76 per cent, respectively).
Borrowers flocked to the major banks during the recent refinance boom amid rising interest rates, as they were attracted to their substantial cashback offers. Since then, the major banks have pared back cashback offers. According to the Australian Finance Group Index, released in October, refinance volumes were down 3 per cent to 30 per cent, largely driven by the withdrawal of cashbacks.
Despite these trends, it has not impacted broker usage of the major banks, according to Broker Pulse.
ANZ was the most commonly used lender in October, the survey showed, with 43 per cent of broker respondents submitting an application to the major bank.
Some brokers praised ANZ for its responsive staff, strong pricing and providing direct access to assessors, while others stated it was the lender of choice for self-employed clients. Indeed, the major bank has been cutting its home loan rates to gain market share recently, leading to a rapidly growing book while the other majors see a marked slowdown. For example, ANZ’s mortgage portfolio saw the strongest growth of all majors in September, up by $2.5 billion from $283 billion in August to $285 billion.
The bulk of ANZ’s growth was due to an increase of $1.9 billion in its owner-occupier loan book, from $188 billion to $190 billion. Investor loans for ANZ also saw the largest increase, reaching $95 billion in September from $94 billion, up by $637 million.
However, others expressed frustration with offshore assessment teams and the bank’s outmoded systems, such as paper loan documents. Some brokers called for reduced turnaround times and more training for document verification teams.
CBA holds strong despite strategic shift
While the Commonwealth Bank of Australia (CBA) recently said it had been focusing on proprietary distribution for its home loans recently (and recent figures showed that its broker-originated loans have been falling), the Broker Pulse survey showed it was the second most commonly used lender among brokers. More than a third (39 per cent) of brokers submitted an application to CBA in October.
The respondents to the Broker Pulse survey said that they were happy with CBA’s consistency, credit policy, process, credit assessors and communication around how an application is progressing.
However, some brokers told Broker Pulse that they were unhappy with the major bank’s pricing, adding that this is affecting CBA’s reputation with brokers and clients.
Others said the business development managers (BDM) require more training on how to support brokers.
2 major banks get equal share
Around a third of the brokers surveyed (32 per cent) said they used the National Australia Bank (NAB) and Westpac.
While NAB’s BDMs received positive (to mixed) responses for their service, some brokers called for better communication on the status of an application.
One broker pointed out that NAB’s pricing is becoming less competitive while its post-approval client management and overall service could be better.
Meanwhile, Westpac received praise from brokers for its bridging loan, pricing and policies (particularly for self-employed and medical clients).
However, other brokers identified several issues at Westpac, such as errors being made during settlements, requiring documents to be redesigned and delays in approval due to IT issues.
Why are brokers using major banks?
Overall, two-thirds of brokers cited client circumstances as the primary reason for using a major bank, while 47 per cent said product pricing was the primary reason (down from 51 per cent in September).
Those using a non-major bank said product pricing was the leading reason (70 per cent), followed by client circumstances (55 per cent).
Macquarie Bank was the only non-major bank among the top five most commonly used lenders – being the third most frequently used lender behind ANZ and CBA. Around 36 per cent of brokers submitted an application to it in October, the Broker Pulse survey found.
Brokers said they were pleased with Macquarie’s turnaround times, pricing, BDMs, credit assessors and overall service.
To find out more about the Broker Pulse survey and participate in future surveys, visit the Broker Pulse survey website.
[Related: What do brokers think about CBA channel conflict?]
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