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Borrowers in Australia are increasingly relying on the support of brokers for help with their financial needs.
Last year, a record 74.1% of consumers, up from 71.8% in 2023, turned to a broker when purchasing a home, according to the Mortgage & Finance Association of Australia (MFAA).
"The value proposition is hard to overlook," Ben Kingsley, managing director of Melbourne-based Empower Wealth, told Australian Broker. "Consumers want choice and options. It's hard to overlook the benefits for consumers." He added that the broker market will likely continue to grow.
It's not hard to see why. Brokers help borrowers understand complex financial matters, provide them with best options, negotiate on their behalf and make recommendations.
Driving the growth for consumers is the rising number of individuals who are interested in buying a home. But there are other factors at play as well. In November 2024, the Department of the Treasury said borrowers should be reviewing their mortgages. The advice, coming from a government body, further highlighted the role brokers play in helping buyers through complicated approval, buying and refinancing processes.
Alvie Oliveira, founder of Queensland-based mortgage brokerage Capta Financial, said that Australia's growing population is also contributing to the growing broker market.
"There are more and more people coming into the country," Oliveira said. "That means more and more first-time homebuyers, and more and more investors. The structure of these deals is too complex for regular bankers, as they look into property."
Big banks are recognizing the importance of brokers, as well. Recently, two of Australia's big four banks, Westpac and Commonwealth Bank, made changes to their third-party leadership teams in an effort to grow the channel. Also, the Australian Stock Exchange-list Australian Finance Group Limited made its first investments under its newly-launched Broker Investments program. The group made minority investments in Empower Wealth and Lifespan Mortgage Services, another sign of the strength of the broker market.
"Brokers are a very important channel for the industry," said Aaron Bassin, cofounder and chief executive officer of non-bank lender Bridgit. "It's free [to go to brokers]. It's tailored advice. Since they're all commissioned, brokers need to abide by best-interest duties. So they have to provide viable options to the borrowers to ensure that they're getting the best product in the market for them. If the consumer goes directly to the bank or the non-bank, they don't need to abide by those same rules. We can put that customer in a product that may not be suitable for them but is suitable for the business. That is really important in the industry, and for consumers, to be able to have trusted advisers in the ecosystem to continue to support the customer and make sure that they enter into the best product for them."
Broker services aren't limited to home loans. In fact, there are a number of other ways brokers can put their skills to work.
Jason Arnold, group executive of origination at non-bank lender Pallas Capital, said the firm's commercial broker market is expanding.
"They're getting a larger share of the commercial finance market," he said. "And if you look at the broker market, I'm really optimistic that they'll continue to take a larger market share."
While more than 74% of home loans are written with the help of a mortgage broker, in Australia's commercial space, only about 30% to 40% of the loans are made with a broker, Arnold said.
"But now more clients, corporate clients and individual clients are seeking advisors and brokers for commercial transactions," he said. "For us, all of the volume we're doing, about 75% comes from the third-party channel. And as the brokers increase their exposure to the commercial finance market, that automatically helps us increase our volumes."
Bassin agreed, adding that the broker channel is a key driver for the firm, which works exclusively with bridge lending.
"We've doubled the size of our national sales team to support the broker strategy over the last couple of months," he said. "We've got more Bridgit employees out there servicing our broker network. But we're also signing up more brokers every day. With bridging, it's a very complicated transaction. It's more complicated than a simple 35-year loan. For us, it's even more important that the broker is able to help educate and explain the pros and cons, how it works, and what is involved in that process for the consumer. So we're spending in terms of awareness, education, training, marketing, just to help ensure that brokers understand that this is a product that's available."
Darren Liu, co-founder and managing director of Finstreet, said the broker's ability to create value for the borrower will determine the future of the broker industry.
"If the customer comes to the broker and the broker doesn't have all the right solutions, then the brokers' value proposition will be devalued," Liu said. "With the right strategy, and the right offering, and the right offering, and the right mentality for growing in the market, the broker will be taking more market share continually."
