Non-bank boss ‘confused’ by ASIC broker comments

ASIC’s review of mortgage brokers remuneration, released in March, found that mortgage brokers play an important role in promoting good consumer outcomes and “strong competition in the home loan market”.

It’s this competitive element that Firstmac founder Kim Cannon has taken issue with.

“I’m a bit confused about some of the comments to come out of ASIC’s review. They have basically come out and said they love brokers, they are good for competition,” he said.

“I sit back and scratch my head and ask: ‘competition to what? They give 85 to 90 per cent of their business to the majors.’ That’s a frustration for me.”

The major banks continue to be the beneficiaries of the bulk of broker-originated loans. However, their share of third-party flows varies widely.

Brokers now account for more than half of all ANZ mortgages, for example, with the major bank’s latest half-yearly results showing brokers wrote 55 per cent of mortgages over the first half of FY17, up from 50 per cent over the prior corresponding period.

Meanwhile, NAB has a significantly smaller share of the broker market (38.2 per cent) but has also seen a significant increase in recent months.

Brokers wrote $92.5 billion of Australian home loans for NAB, new results for the half-year ending 31 March 2017 have shown, nearly 10 per cent more than the same period the year before.

The latest AFG Competition Index paints a different picture, revealing a six-month trend of broker-originated loans going to non-major lenders.

As at February 2017, the major banks' share of AFG broker-originated loans account was 65.25 per cent, down significantly from 72.2 per cent in August last year.

[Related: Major bank sees mortgage portfolio hit $320bn]