With rising interest rates and many different loans on offer from a wide range of lenders, it is no great surprise that borrowers are flocking in record numbers to mortgage brokers, away from dealing directly with the lenders themselves.
A study conducted recently by research group Comparator, a CoreLogic business, for the Mortgage & Finance Association of Australia (MFAA) found that between July and September 2022, mortgage brokers facilitated 71.7% of all new residential home loans.
This is the first time the mortgage broker market share has exceeded 70% in the forty consecutive quarters the measure has been tracked.
The result is a 4.8% increase compared to the 66.9% achieved in the same quarter in 2021 and an 11.6% increase on the 60.1% recorded in the September 2020 quarter.
At $94.4 billion, the value of home loans settled by mortgage brokers was the highest observed for a September quarter and represents a 1.08% increase over the year.
Mortgage brokers serve as a ‘go-between’, dealing with banks or other lenders to arrange a home loan. They are required by law to act in the borrower’s best interests when suggesting a loan, and as the lenders pay them a fee or commission for selling their products, the borrower doesn’t pay them anything.
According to moneysmart.gov.au, a good broker works with you to:
– understand your needs and goals;
– work out what you can afford to borrow;
– find options to suit your situation;
– explain how each loan works and what it costs (for example, interest rate, features and fees); and
– apply for a loan and manage the process through to settlement’.
MFAA CEO Anja Pannek is unsurprised by the increase, particularly since a number of reforms have been implemented over the past five years.
“Buying a home is often one of the most important financial decisions many Australians will make in their life”, Pannek said.
“The fact we now have seven out of ten borrowers choosing to use the experience and services of a mortgage broker to help them navigate their finance options is a testament to the trust and confidence that Australian home buyers have in mortgage brokers.
“With a backdrop of a rising interest rate environment, and with many borrowers reverting from fixed to variable rates in 2023, mortgage brokers are also well placed to support their clients to understand their options and select the product best suited to them.
“This may include negotiating a more competitive rate with their client’s current lender or refinancing to a different product that is in their best interests”, she concluded.
