But Commonwealth Bank says brokers 'at the heart of helping Australians into homes'
The Finance Brokers Association of Australia (FBAA) has made the atypical move of commenting on a bank’s financials after Macquarie Bank delivered its interim report last Friday.
But of course, Macquarie is not like the other banks – by writing nearly 100% of its typically low-LVR loans through the third party channel, Macquarie has upended the game for mortgage finance
In times when some of Macquarie’s biggest competitors are increasing their focus on proprietary lending in order to arrest slimming margins, Macquarie has doubled down
As Macquarie’s head of broker sales Wendy Brown (pictured, centre) said on Friday: “The broker channel has been and continues to be fundamental in enabling us to prudently grow our home loans business to where it is today, with brokers accounting for more than 95% of our home loan originations.
The results suggest the strategy is working. Macquarie’s loan book grew by 13% year on year in the period, far beyond system growth, with the group now representing approximately 6.5% of the national mortgage market, up from 5.7% in the prior six months
FBAA managing director Peter White (pictured, right) said Macquarie Bank’s surging home loan book shouldn’t come as a surprise.
“Brokers are bound to represent the best interests of their clients, and it's clear they're backing Macquarie because it’s delivering results,” White said in comments sent to MPA.
“Ninety-five per cent of Macquarie home loans are now being originated through its broker channel, indicating that borrowers are becoming increasingly discerning amid growing product innovation
“Unlike the major banks, Macquarie isn’t relying on the same old products to drum up business – instead, they’re responding to consumer-driven demand, and it’s paying dividends.
“Brokers recognise a good deal when they see it and will only take the very best offers to their clients, whether it’s from Macquarie or any other lender.”
Commonwealth Bank says brokers 'remain central to our lending strategy'
According to White, the fixation from some major banks on increasing branch lending and reducing support for broker channels is short-sighted and “misses the point.”
“The home loan market is more competitive than ever and increasingly driven by innovation, yet bizarrely some banks want it to be a closed shop, where they carve up the spoils,” he said.
“Increased competition is giving consumers more choice than ever and it’s clear they’re overwhelmingly putting their trust in mortgage brokers.
“It never ceases to amaze me that some banks view brokers as competitors, given the volume of loans brokers originate for them.”
The broker-versus-bank discourse has certainly increased recently, with Anja Pannek, chief executive of the Mortgage and Financial Association of Australia (MFAA) also weighing in via an open letter published today.
“Australia has one of the most consolidated banking systems in the developed world,” said Pannek. “Without brokers, Australian borrowers would be worse off, with fewer choices and more expensive mortgages. That’s an outcome no government, regulator or consumer advocate would welcome.”
Pannek contended that “brokers don’t compete with banks… banks compete with each other. Every pricing decision made by a lender positions them against other lenders and is driven by their own growth targets”.
She lashed out at the apparent resurgence of channel conflict, saying: “Members tell us of ‘under-the-counter’ branch pricing and cases where a borrower’s application by a broker is declined but then approved in-branch, which raises legitimate concerns in my mind of lender bias in credit assessment.”
Yet as Australia’s largest mortgage lender and one that’s at the centre of the discourse, Commonwealth Bank has made it clear that brokers are central to its lending strategy.
In comments given to MPA today, CBA’s general manager third party banking Baber Zaka (pictured, left) said: “Mortgage brokers are at the heart of helping Australians into homes, and they remain central to our lending strategy.
"We’re focused on growing our flows sustainably, by listening to our brokers and adapting our services to meet their needs. This year we’ve updated our HELP debt, construction loan and rental income policies to give brokers greater flexibility and help more customers realise their home ownership goals.
“We’ve also strengthened our broker support through a refreshed tiering system, expanded sales capability, and implementing a national sales lead. Our focus is on long-term support, backed by better technology and processes to make it easier for brokers to do business with us.”
