The evolution of the mortgage broking industry from the rough and ready era of the early 1980s to the profession that it is today, has been a been a truly remarkable journey.
The fact that it may now be considered a profession in itself speaks to the profound changes that have occurred in mortgage broking over the years and particularly over the past 10 years.
When brokers first became involved in the residential mortgage space from the mid 1990s they were "order takers" that primarily provided rate comparison services in a pre-internet era. Broker market share was in the teens at best and the channel was supported primarily by the new breed of securitisers and regional banks seeking market share and geographic diversification.
The adoption of the channel by the major banks was the next step in the evolution of the broker market.
The onset of the GFC, about 10 years ago, was ‘an event’ that saw the retreat from the market of the securitisers and a concentration of market power in the major banks.
The most significant factor in the continuing evolution of the broker market over the last 10 years has been the introduction of the NCCP and increased regulatory scrutiny of the channel.
Whilst initially viewed with some trepidation by brokers, the NCCP, in my opinion, has been a major step forward in the path toward maturity of the broker channel.
For the first time, via licensing requirements, qualitative factors were introduced to the profession weeding out car boot and backyard operators, increasing both consumer and lender confidence in the channel.
Increased confidence was also enhanced by the framework of “Responsible Lending Conduct’ requirements included in the NCCP, together with consumers’ access to External Dispute Resolution providers.
The fact that broker market share has increased to greater than 50 per cent and that the major banks continue to support the channel is further indicative of the value of the channel. Far from being order takers, brokers now provide a service that provides genuine credit advice to consumers, ensuring that consumers receive loans that suit their needs and objective, as required by law.
Despite increased regulatory scrutiny and such things as the Sedgwick review, so long as brokers continue provide benefits to consumers, though professional, lawful and ethical conduct, the portents for the broker channel remain bright.