Broker Market Balloons: What to Expect in 2023.
There is no doubt, we are a resilient lot of mortgage brokers within the Australian mortgage broking industry.
Established in the early 90s and loosely based on the American and Canadian model with upfront commissions, this was one step towards a path to both upfront and trail.
Mortgage brokers were disregarded as a viable business by the powerful banks who beefed up their own mobile networks to counteract the competition. Whilst there was a tiny industry with a handful of successful brokerage businesses in the larger capital cities writing just enough business to keep the doors open.
Then along came Aussie John with the now famous catch cry, “We’ll save you”, and it became apparent that customers could get a much better deal, mortgage brokers could earn a living and the banks were making a hefty margin.
Everything was about to change. Mortgage broking exploded and numbers went through the roof.
Get yourself a name, neon sign and something that resembled an office, and you are underway.
Fast forward 30 years and entry to mortgage broking industry is more in keeping with a professional entity, with a Cert 4 or Diploma, mentoring, police checks and credit checks. Not before long, the industry needed integrity checks to solidify its future.
Then, out of nowhere, everything that was wrong in the finance sector was blamed on mortgage broking, whilst the mortgage broking industry felt the full effects of the royal commission, along with a few helpers at the major banks that were set up to unwind the industry with a “fee for service model”. The mortgage broking industry fell under greater scrutiny, with perceptions about the services that mortgage brokers provide altered negatively.
The industry rallied and made it very clear to all and sundry, “Not on my watch”.
Fast forward a few years, the mortgage broking industry experienced Covid-19, increasing interest rates, a huge rise in compliance, serviceability issues, never seen before competition and retention from lenders. And yet, the mortgage broking industry remained incredibly confident, despite all the upheaval of the last few years with these challenges. And despite all of these the challenges, the demand for mortgage brokers has never been higher.
Mortgages written by mortgage brokers surged to beyond 70% last month.
Just think about that; an industry that was ignored, written off as an option, impacted by the Royal Commission, effected by Covid-19, and the tough might of the big banks. Yet, the mortgage broking industry still saw unbelievable results.
The mortgage broking industry in Australia has been predicted to grow substantially over the next few years. It is clear that mortgage brokers are extraordinarily important to Australians and the Australian economy. Whilst there will always be regulatory challenges within the mortgage broking industry, mortgage brokers should remain extremely optimistic for the future of the industry. This forecast is dependent on Australia’s economic recovery from Covid-19 pandemic, business confidence, consumer sentiment and residential property market conditions continue to affect mortgage broking industry operators.
Congratulations to every single hardworking mortgage broker Australia-wide.
At Vision Aggregation, we know that to achieve that number is an extraordinary accomplishment. Mortgage brokers are the intermediaries that provide consumers with information about the mortgage products and processes following, with the mortgage broking industry increase the choice and competition between lenders, leading to better service levels and competitive mortgage pricing for our customers. The introduction of the best interest’s duty, along with the freedom that mortgage brokers have to operate their own businesses, mortgage brokers have superior knowledge of how to plan for 2023 and continue to put our clients at the forefront of our minds.
What trends will shape the mortgage broking industry in 2023? Remote advice, compliance, intensified talent, ballooning customer expectations, transitioning from excess demand to excess supply may be the key to success for mortgage brokers in 2023.
In 2023 will we see 80%?
You would be foolish to doubt the resilience of mortgage brokers.
In the mortgage broking industry, anything is possible.