Borrowers favour smaller lenders, according to mortgage broker survey

From

Huw Bough

Larger banks are falling out of favour among homeowners seeking mortgages, according to the latest MyState Bank survey of its national broker network.

In the survey, completed in last week of July, 70% of respondents reported they had noticed an increase in the number of clients asking for loan options from a smaller bank.

Of these half (36%) said they had noticed a “significant” or “reasonable” increase in requests for home loans from smaller banks, while the other half (34%) said they had noticed a smaller increase.

The survey followed public hearings by The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

At the same time as brokers were seeing customers move away from large banks, the brokers themselves said they would follow suit over the next year and broker more home loans from smaller and regional banks.

More than four fifths of respondent brokers (83%) said they would ‘definitely’ or ‘probably’ broker more home loans from smaller and regional banks in the next 12 months while 16% said ‘maybe’. Just 2% were confident they would make no change.

When asked why, 46% of respondents said smaller banks had their interests aligned to brokers and were more committed to providing a high level of service.

Just over 28% said it was because smaller banks were now just as competitive as larger banks, while 17% said larger banks needed to be kept on their toes and using smaller banks as well as large ones helped to achieve this.

Only 4% of surveyed brokers said broking more loans from smaller banks was a risk management move, in case larger banks moved away from the broker channel.

MyState Bank Group Executive Broker Distribution, Huw Bough, said the survey results showed the Australian mortgage market was dynamic and competitive and that mortgage customers were highly responsive.

“The results are encouraging for smaller regional banks like MyState Bank, which have historically operated at a funding disadvantage to larger banks. We will be monitoring this closely to see if a clear trend emerges.

“What is clear is that technology has really opened up the mortgage market to smaller banks in recent years. Smaller lenders like MyState Bank do not need a large bricks and mortar network to service the needs of customers,” he said.

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