Huw Bough

As more Australians emerge from lockdowns, the property market continues to surge ahead.  The latest research^[1] from MyState Bank indicates that Australians are viewing mortgage brokers as highly valued partners in securing a home loan during this time.

The research also highlighted greater comfort in a ‘virtual loan’ process as well as seeking a loan outside the ‘Big Four’, as more Australians look towards alternative lenders for competitive financing.

MyState Bank surveyed more than 500 Australians who had used a mortgage broker in the past three years to better understand their experience.

Overwhelmingly, the research found that the experience was highly positive.

86% surveyed said they were either very satisfied or satisfied with the experience.

91% said they would recommend the services of broker to their family and friends.

MyState Bank General Manager of Banking, Huw Bough said, “As people look for ways into the competitive housing market, many are seeking the assistance of a mortgage broker to help them navigate the loan process, and secure the best deal as fast as possible.”

The research also showed:

• 86% of respondents were comfortable being offered a loan from outside the ‘Big Four’
• 24% of first home buyers were 45 years or older
• 26% were looking to refinance an existing property
• 20% were looking to invest in additional property
• 22% of first-time buyers in the owner-occupier category were women, surpassing the number of males buying their first property (20%).

“The property market has been fuelled by a combination of factors. These include record low interest rates, Australia’s negative gearing system, extra savings from forced lockdowns and support payments from the government. We’re also seeing intense competition from lenders offering better deals and cashbacks,” Mr Bough said.

“Australians are taking more control over their money and want to find a better home loan deal. MyState Bank is focused on offering a highly competitive solution with the aim of fast two-business day conditional loan approval turnarounds.”^[2]

The survey also found the search for ‘a competitive interest rate’ was the top reason Australians seek out the services of a mortgage broker, followed by ‘access to the best loan to suit my needs’, ‘help with navigating the loan approval process’ and then ‘fast loan approval process’.

COVID changes the face of how Australians apply for a home loan and find a home

The pandemic has permanently changed the way Australians interact with mortgage brokers and lenders.  This has been accelerated by quicker adoption of technology.

The research revealed eight in 10 people surveyed were very comfortable with an entirely online mortgage process.

“At MyState Bank we’ve long recognised the need to become a pure digital bank to support customers across Australia. Our goal is to use technology to provide easier and quicker access to home loan services,” Mr Bough said.

Mortgage brokers are seen as trusted partners during home loan process

Using a mortgage broker is now one the most popular ways to secure a mortgage in Australia.

The research revealed that:

• 90% of respondents believed mortgage brokers act in their best interests, and
• 91% would recommend the services of brokers to family and friends.

“Affordability is the challenge for many Australians, but particularly first home buyers. Brokers are critical to health of the housing market in Australia,” Mr Bough said.

“Brokers provide consumers with information about products, access to competitive interest rates and offer significant support as people secure a loan and then their home. They also increase competition between lenders, making the market work better.”

MyState Bank: Working with a mortgage broker

•  Make sure you have all your key financial information in one place to speed up the process, including bank account statements, proof of deposit, and proof of income with payslips or tax returns, and statements for any other liabilities such as credit cards or a car loan.
• Talk to your broker about the pros and cons of fixing part or all your home loan.
• Once the broker understands your needs, get a clear outline of expected turnaround times for pre-approval. Lender turnaround times vary greatly, with some major lenders taking as much as 30 days just to look at your application (pre-approval), whereas some generally have quicker turnaround times of 2-4 business days.
• Be comfortable managing the process virtually. It is going to make the application easier and the loan process faster.

———-

[1] Notes on research: Nationally representative survey conducted by PureProfile of 517 Australians during September 2021
[2] Loan applications are subject to MyState’s credit approval criteria.

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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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Huw Bough

An overwhelming proportion of mortgage brokers anticipate selling more home loans from smaller and regional banks to their clients this year, according to the latest MyState Bank survey of its national broker network.

Respondent brokers said this was because smaller and regional banks had become as competitive as large banks and provided high levels of service.

More than 95% responded positively when asked if they would use smaller lenders more often. Almost half (46%) said ‘yes, definitely’, 23% voted ‘yes, probably’ and 26% voted ‘yes, possibly’. Only 4% of respondent brokers voted ‘no, I doubt it’ and fewer than 1% answered ‘no, I will broker less home loans from smaller and regional banks’.

For those brokers who voted ‘yes’, the main reasons were ‘smaller banks are now just as competitive as larger banks’ (35%) and service levels (34%).

Other reasons for broking more loans from smaller and regional banks included maintaining competition with big banks (21%), customer preference for small bank loans (7%) and risk management (3%) in case large banks moved away from the broker channel in favour of their own networks.

MyState Bank Group Executive Broker Distribution, Huw Bough said the survey results were indicative of the fast-changing home lending landscape in Australia.

“The survey results are encouraging for smaller regional banks like MyState Bank which have historically operated at a funding disadvantage to larger banks. The wider industry will be watching closely over the coming months to see if the findings of the Royal Commission will encourage more home owners to look beyond larger banks when it comes to mortgage choice.

“Technology has really opened up the mortgage market to smaller lenders in recent years as the need for a branch network is no longer a necessity. Smaller lenders like MyState Bank can now offer mortgage products with all the features of the products offered by our larger counterparts.

“Being a smaller bank, we are reliant on the broker channel for distribution. We have a very clear focus on its importance and the value brokers bring customers through providing greater choice and competition. Having this clarity makes it easier to move from relationships to partnerships,” Mr Bough said.

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Huw Bough

More than half of mortgage brokers are not concerned about increased competition from online broking platforms according to the latest MyState Bank survey of its national broker network. Nevertheless, almost a third of respondents are seeking to improve the digital capabilities of their businesses.

More than 47% of brokers surveyed by MyState said that in the face of increased competition from online broking platforms, they would remain focused on their existing business models, which they considered to be competitive. A further 13% said they believed the threat of greater competition from online platforms was not significant to them.

However, not all of the broking community was in agreement about the impacts of the current competitive environment. More than 22% of brokers surveyed said they were adopting new technology and software to remain competitive with another 5% seeking to partner with fintech companies to improve their client offerings.

The survey respondents were split when it came to the impact of mobile payment solutions such as Apple, Android and Samsung Pay on their clients’ choice of mortgage provider.

Almost 48% of brokers said mobile payment solutions were “important” (34% “somewhat important”, 10% “important”, 4% “critically important”) to their customers and influenced their choice of mortgage provider. Just under 40% of respondents said their clients were “focused on the best deal they can get in terms of price and features” in relation to the mortgage itself, rather than mobile payment solutions. A further 15% said mobile payment solutions were “rarely mentioned” by customers.

MyState Limited Group Executive Broker Distribution, Huw Bough said the results of the survey reflected the relationship-based nature of the broking industry.

“Many brokers have stated that their customers still prefer face-to-face service when it comes to the largest transaction of their lives. However, a large number of brokers indicated that they are keen to explore the opportunities that new technology presents in relation to improving customer service. It looks like the debate will continue for some time yet,” he said.

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Huw Bough

The vast majority of mortgage brokers are concerned about the public perception of their industry according to the results of the latest MyState Bank survey of its national broker network.

More than 65% of brokers surveyed by MyState said they were seriously concerned (34.2%) or moderately concerned (31.6%) that the Royal Commission intoMisconduct in the Banking, Superannuation and Financial Services Industry would negatively impact the reputation of the broking industry.

The broking community was split in its attitudes to ASIC also recently shining the spotlight on lending standards in the industry. More than a third of respondent brokers (37%) were in support of greater industry scrutiny by the regulator, with 17% saying the greater focus was ‘unfortunate’ but also ‘self-inflicted as there were rogue mortgage brokers in the past that damaged the industry’s reputation’.

Meanwhile, 28% said that it was just a ‘political exercise designed to benefit non-broker interests’ and 35% said they were in two minds as to whether broker reputations would be tarnished.

As for media speculation that the Royal Commission and a recent draft Productivity Commission report could lead to the replacement of broker commissions with a fee-for-service model, 42% said this was unlikely or would not happen, with 33% ‘evenly balanced’. Nevertheless, 23% thought this outcome was ‘a strong possibility’.

MyState Limited Group Executive Broker Distribution, Huw Bough said the survey results showed that while brokers had some real concerns, they were also passionate about their industry, open about problems and supportive of improving standards.

“The Royal Commission has attracted a lot of attention recently, but it must also be acknowledged that well before the commission began representatives of Australia’s mortgage broking industry prepared a landmark reform package to improve customer outcomes and confidence in mortgage broking,” he said.

The reform package, which was the result of engagement between industry bodies, lenders, brokers, aggregators and consumer groups through the Combined Industry Forum, agreed on six principles to ensure improved standards of conduct and culture, while preserving competition in mortgage broking.

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Huw Bough

More than 50% of brokers surveyed by MyState Bank say their number one concern is the speed with which regulators have made changes to LVRs and loan availability as they attempt to cool down hot residential real estate markets in Sydney and Melbourne.

A further 25% said their primary concern was the potential for further regulatory change with limited notice, while 8% cited the ability of their broking businesses to adequately respond to change at short notice. Only 9.5% nominated the potential for a significant housing market slowdown as their major concern. The survey of MyState’s national broker network was carried out over the past 10 days.

More than 60% of respondents said they did not believe regulators gave enough consideration to the wishes of consumers, such as home buyers and investors, in making the recent changes.

More customers say they do not want a mortgage from a big four or major bank

In addition to this, 46% of respondent brokers said they were seeing a marked increase in customers saying they did not want a mortgage from a big four or major bank.

When asked how much this had increased over the past six months, 29% of respondents said anti-big bank sentiment had increased 20% or more, 10% said it had increased between 15-20% and 15% said it had increased between 10-15%.

Just over 20% said the number of customers requesting a non-big four or major bank mortgage had increased by 5-10%, with 25% saying it had increased by around 5%.

MyState Group Executive Broker Distribution, Huw Bough said the responses indicated members of the mortgage broker community believed they and other stakeholders were not given adequate notice of recent regulatory changes and were wary of further changes being imposed on their businesses and occupation without adequate consultation.

“Mortgage brokers are a key mortgage distribution channel in Australia. Broker networks give consumers greater choice and encourage competition by enabling smaller challenger banks to offer products in markets right across the country.

“As an integral part of our financial system, it is important that the broker industry’s views are fully considered and taken into account in any industry change,” Mr Bough said.

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