Crystal balling for 2015

If you thought 2014 presented some incredible opportunities for mortgage brokers, 2015 is looking to be even bigger. Historically-low interest rates will ensure the market remains strong overall, however this means more tough competition where every broker needs to have their service proposition down pat.

The theme of consolidation within the small to mid-sized brokerages will continue as the market becomes increasingly competitive and challenging to ensure that both broker and consumer needs of risk, compliance software and support are met.

Tied to this are the lenders, and with mortgage brokers now writing around 50 per cent of the home loan distribution flows, I think 2015 will bring even more fierce competition within this group, with more lenders wanting to play and enter into the broking space, including some interesting new entrants not necessarily directly within the industry currently.

Diversification will become increasingly prevalent, as more brokers expand into financial planning, insurance and other synergistic products which add value for customers while creating a more sustainable business.

Focus on the pass-through commissions to brokers will continue to ease and be balanced with what the aggregator or franchisor provides its members to assist in building a sustainable long-term business.

James Symond, executive director, Aussie Home Loans

Rise in quality

I believe 2015 will be a year when brokers will be very focused on the professionalism of their craft. There is definitely a far greater focus going forward that the whole position of being an industry professional is taking a quantum leap.

I think there will be more demand for better service standards from the broker to the lender, with particular focus on bringing new, educated recruits into the industry. 

Meanwhile, those already in the industry will continue to up the ante on what professionalism means to them and how that’s personified through to their clients. Technology will also play a key role in enhancing the service standards of brokers and the speed at which they can get things done, which will put more pressure on lenders to be smarter.

Peter White, chief executive, FBAA

Lender competition

I feel that broking will be seen more as a profession; however, we need to be cautious that our industry does not attract people who just want to make a quick dollar in the short term and ruin the reputation of the broker market. We will see a lot more competition between lenders not just with interest rates, but also with the loosening of lending policies to attract clients.

Foreigners investing in Australia will increase so long as the government does not change investing policies for foreigners.

While it may appear that the market is overheated, there is still more demand for properties than supply, plus there are large numbers of properties being traded, so this gives me comfort that we won’t see a housing bubble, but we’ll see a heated market.

Justin Doobov, managing director, Intelligent Finance

Digital disruption

We will undoubtedly see further growth in the mortgage broker industry in 2015. We’ve already seen a 50 per cent increase in total home loans across Australia in the past 12 months, and will likely see continued growth next year.

2015 will be another strong year for competition amongst lenders in a backdrop of record-low credit growth. Banks will continue to fight for a smaller slice of the pie, and are likely to continue looking for ways to attract customers.

This may further be compounded by new market entrants coming onto the scene. Next year will also see movements with the official cash rate. The next cash rate change will likely be upwards and occur in the second quarter of 2015.

Digital disruption will likely influence the banking and mortgage broking industry in 2015. Longer term, the potential for digital disruption is putting the onus firmly on banks and brokers to enhance both their offering and service proposition.

Stewart Saunders, national manager of brokers, ME Bank

Increased profitability

Looking forward to 2015, I think there will be a bigger challenge on better technology within broker businesses to help make it clear how their business is moving and where they need to make adjustments.

I think the other challenge will be around brokers generating more revenue from their businesses without increasing their fixed costs, and how an organisation such as the MFAA can help support members in implementing initiatives into their business, whether that be through establishing referral programs for them or helping them understand how to build referral networks.

Siobhan Hayden, chief executive, MFAA

Diversification and consolidation

My prediction is that interest rates will remain low while the distribution of home loans and other services by brokers will increase in market share.

There will also be more mergers and/or acquisitions within the third-party channel, and the MFAA will reinvent itself and become the darling of the industry.

Negative gearing is here to stay until there is a major overhaul of the entire tax system, which is not likely under this government.

The industry will continue to debate the importance of broker diversification. Technology and social media will continue to play a role in communicating with clients and building brand awareness, but businesses must not get sidetracked on social media until their core offering is clear and delivered consistently.

Doug Mathlin, director, FrontRunner Consulting Group