Less than 50% of future FHBs likely to use brokers 

Less than half of future first-time borrowers are likely to choose the mortgage broking channel to secure their mortgage, with the proprietary channel and its existing relationships proving more enticing.

The Consumer Access to Mortgages 2023 report, conducted by Agile Market Intelligence and released in association with the Finance Brokers Association of Australasia (FBAA), has found that only approximately four in 10 (44 per cent) future first-time borrowers are likely to choose the mortgage broking channel.

The fifth annual edition of the research was conducted between 13 and 27 September and used a sample of 1,263 responses that included 776 current mortgage holders and 487 non-mortgage holders. The research aims to explore the attitudes, perceptions and priorities of Australian consumers in a bid to better inform industry stakeholders.

It found the majority of future first-time borrowers (56 per cent) would go through the proprietary channel.

Those between 30 and 39 years old were the most likely to use a mortgage broker – with 56 per cent indicating that they would use this channel over the proprietary channels – followed by the 40–49-year-old age bracket, at 49 per cent.

Those aged over 60 years and those between 50 and 59 years old were the most likely to choose the proprietary channel instead (at 70 per cent and 55 per cent), with the youngest age group, 18–29-year-olds, also holding a proprietary channel preference of 53 per cent.

When the survey asked respondents why they would choose their channel of choice, both cited ease and convenience, with 72 per cent citing this as the reason behind choosing a broker, with 66 per cent stating it was the reason for using the direct channel.

FBAA managing director Peter White AM said the industry needed to look at ways to change the trend.

He commented: “This presents a challenge and a huge opportunity for brokers and we must look for ways to reach and educate first-time borrowers.

“Their bank has no obligation to act in their best interests and will simply attempt to sell them a product. This will be a terrible outcome for many first-time borrowers.

“We must all work harder to find and educate this market. It’s not just about us, but about the best interests of borrowers.”

As part of a move to help borrowers learn how brokers can help them, the FBAA is currently testing a new consumer-facing website BeforeULoan.com. Set to be launched in early 2024, the website aims to provide resources and broker contacts for “people who are just looking to find answers about their loans”.

Michael Johnson, director of Agile Market Intelligence, told Mortgage Business: “Brokers are quite used to hearing that broker market share has continued to increase, but we think this insight highlights that there’s a lot of future first-time borrowers out there that have limited awareness of brokers.”

“We think this is a massive opportunity for digital-focused brokers to provide more information and education about how a mortgage broker might be able to help you get into your first home sooner.”

However, the report found that broker client loyalty was higher than in the proprietary channel, and that the mortgage broking channel has a higher rate of extremely satisfied clients.

Mortgage stress on the rise

The research also revealed that four out of 10 Australians (41 per cent) have seen their financial situation worsen over the last 12 months with 10 per cent believing it was significantly worse.

According to the survey, those on lower household incomes were more likely to feel worse off, while those renting and owning their own home with a mortgage were equally worse off (45 per cent).

Approximately one in three Australian mortgage holders could be experiencing mortgage stress (having mortgage repayments that are 30 per cent or greater than household income), the survey found.

The research revealed that 10 per cent of respondents have mortgage repayments of between 41 and 50 per cent of their income, predominantly pushed by rising costs and the highest interest rates in a decade, with borrowers rolling off fixed rates.

Mr White added that the research showed the Reserve Bank of Australia (RBA) that borrowers were being impacted by their decisions and that “it’s getting worse, not better”.

He commented: “The FBAA isn’t advocating for irresponsible fiscal management, but the RBA cannot dismiss the human toll that results from its decisions.

“Australians can’t refinance their way out of this – they need relief.”

[Related: 1 in 3 first home buyers used guarantee schemes]