Broker numbers surging, although dead weight makes up 15% of market
While mortgage brokers achieved record market share in the six months to 30 September 2024, the rate of successful loan applications fell to the lowest point in three years.
According to the Mortgage and Finance Association of Australia (MFAA)’s latest Industry Intelligence Service report, market share of mortgage brokers reached a record 74.6%. This is the highest ever observed for the sector, up 3.1 percentage points year-on-year.
Brokers settled $378.87 billion worth of home loans in the period, the highest annual figure on record and only the second time settlements have surpassed $370 billion.
However, conversion rates continued their downward trajectory for the fourth consecutive period, falling to 76.1%.
This represents a two-percentage-point decline year on year and a 0.2 percentage point drop period on period, pointing to a more competitive lending environment and potentially tighter credit assessment processes.
Conversion rates peaked at 87.3% in mid-2022 but have steadily declined since. However, they remain materially higher than the sub-70% conversion rates seen prior to 2020.
Market saturation is undoubtedly playing into these falling conversion rates.
The number of brokers on the beat continues to rise, with MFAA noting a 12% year-on-year increase to more than 22,000 – the highest on record. Over the past five years, broker numbers have surged by 34%, meaning there is now one broker for every 1,211 people living in Australia.
However, not all brokers are active.
According to the MFAA, inactive brokers – those who didn’t write a loan in the reporting period – represent 15% of the broker population. This is roughly flat year on year.
The number of female women has also remained flat at less than 27% of the broker population.
Other key findings of the report show that non-major banks are increasing their market share against the Big Four, although non-bank lenders saw their market share decrease.
Sole operators comprise 42% of the broker population, while the number of brokers writing commercial loans is up 24.21% year on year to a record 7,023, with the value of commercial loans settled reaching $22.68 billion (up 31.2%).
For the six months to September 2024, the average value of loans settled per broker climbed to $9.15 million, marking a 13.6% increase over the previous six-month period and a rise of 3.75% year-on-year.
This was attributed to a surge in the value of home loans settled per broker.
