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NAB has declared the value of brokers will continue to “shine through” in the future lending market, despite a number of forces impacting both their customers and their businesses.
Following brokers recording their highest ever market share of 74.9% in the September quarter, NAB has nominated a series of trends that it expects to shape broker businesses in years to come.
The Market Megatrends 2024 report, prepared together with CoreLogic, foresees brokers being key to customers facing shifts in property, business finance, generational wealth and technology.
In the report, NAB’s Economics Unit predicted Australian capital city home prices will rise by 5% over the course of the 2025 calendar year, following the large increases in prices seen in recent years.
However the bank said broker customers will need to wait until May 2025 for the RBA to reduce rates by 25 basis points, followed by a gradual easing to settle at around 3% in mid-2026.
CoreLogic executive research director Tim Lawless wrote the limited new supply of housing coupled with demand boosting policies had created challenges for home ownership in Australia.
The report suggested brokers could help customers considering lower priced housing, such as medium to high density markets, or those leaving the city to buy or considering rentvesting.
Investors, likewise, are a key opportunity for brokers, with CoreLogic observing the value of lending to investors had increased by more than double the rate of owner occupiers over the past year.
Lending to investors was up 34.2%, while owner occupiers were the source of a 16.8% rise.
Lawless wrote investors were tending to chase capital gains rather than rental returns, and there was a scarcity of suburbs achieving both high growth and high yield, usually in regional areas.
Adam Brown (pictured above), NAB executive for broker distribution, wrote in the report that the property market “continues to change rapidly”, but was “shifting to favour buyers and activity levels are increasing”.
He cited ABS statistics showing that new loan commitments had trended higher since early in 2023.
“While the cost of living and housing accessibility is a concern for many, the property market is still active, and consumer sentiment is improving,” Brown said.
There are early signs challenging business conditions are reaching an end point, NAB said, with 6 in 10 SMEs telling NAB in its Q2 SME Insights Survey they would invest over the next 12 months.
“Current economic conditions are having a mixed effect on the 2.7 million SMEs that call Australia home,” the report said. “While businesses in some sectors are thriving, others are finding conditions more challenging to navigate, but across all industries and sectors there will be winners and losers.”
Chris Thomas (pictured below), NAB executive for commercial broker and equipment finance sales, said that deeply understanding these customers would enable brokers to showcase knowledge and expertise.
“Key areas where brokers can provide support include succession planning and helping businesses drive growth through strategic investments,” he said.
NAB’s report identified a coming “wealth transfer wave” in Australia, with an estimated $5.4 trillion in wealth due to transfer between generations in Australia over the next two decades.
With 22% of small business owners aged 60 and over, the major bank said that many SMEs will also change hands in the coming decades, and they will need brokers to help them with finance.
“Brokers are well placed to guide customers through lending solutions and collaborate with other financial professionals to support their wealth transfer needs,” the report stated.
Brown wrote in the report that open banking, Consumer Data Right and artificial intelligence-led technologies have “positioned the broking sector in a new phase of evolution”.
This “tech turning point”, he said, would change the way brokers do business, particularly through enabling brokers to deliver more personalised and data-driven services to customers.
However brokers dealing in data will need to be more aware of cyber security risk, with NAB October data showing 63% of Australians have now fallen victim to at least one cyber attack or data breach.
NAB’s report urged brokers to protect their data by sticking to the basics, learning to spot “red flags” that could indicate a scam or security threat, and educating themselves and their staff.
“Over time, AI and other emerging technologies, along with initiatives such as Open Banking and CDR will continue to transform the broker and customer experience,” the report said.
“As the industry continues to evolve, the integration of these technologies will undoubtedly play a crucial role in shaping the future of broker-client relationships and the broader financial landscape.”
