Broker numbers rising in saturated market

Aggregator CEO provides global audience with insights on Australia

Broker numbers rising in saturated market

When it comes to the number of brokers servicing clients, Australia is a heavily saturated lending market, Finsure Group’s CEO Simon Bednar (pictured above) told attendees at last month’s International Mortgage Brokers Federation World Summit.

Finsure is a Sydney-based mortgage broker aggregator which has close to 3,000 broker members across Australia.

With delegates from all over the world gathered in Las Vegas, Bednar took the opportunity to give them an insight into the Australian broking industry which currently has just under 20,000 mortgage brokers to service the nation’s borrowers.

Bednar said the latest figures suggested that about 67% of all home loans in Australia were written by brokers.

“It's been growing substantially every year,” he said.

Bednar said the growing number of brokers in the market ensured that borrowers had plenty of choice when it came to selecting the right loan for them.

Offering summit delegates a chance to compare themselves to their Australian counterparts, Bednar said the average broker earnt about $200,000 a year.

He said each broker usually worked on securing loans with an average value of about $650,000 and, on average, they would handle two loans of that value, per month.

While only around 25% of Australia’s broker network are women, Bednar said there was a strong desire to increase female participation in the market.

According to Bednar, Australia’s population of about 25 million people has around 10.3 million properties with homeownership numbers sitting at around 67%.

He said there are currently around 97 lenders in Australia, including the four big banks, servicing about 18 million clients in what he called a “heavily saturated lending market”.

Bednar told the audience the industry had in recent years faced a series of challenges which included the most extreme run of cash rate hikes that the country had seen in 25 years, with brokers also still reeling from the shake-up that came as a result of the COVID pandemic.

“So previous to the COVID pandemic, our average loan length was 4.2 years … over COVID that reduced to two years.”

He said during these “turbulent times” banks offered customers cashbacks of up to $10,000 to refinance and in some cases, customers were refinancing every six months – causing many brokers to suffer financial losses.

When it came to comparing home interest rates globally, he said lenders in Australia were charged similar rates to their global counterparts at an average of about 6.6% once margins were added.

He said the average home loan in Australia sat at about $400,000 but thanks in part to the string of rate rises in recent years, home affordability had become hard.

Yet, despite some borrowers battling to service their loans, when it comes to the top 20 cities in the world for affordability, six of them were in Australia, Bednar said.

“It's ridiculous.”

However, Bednar said Australia still grappled with a housing supply issue, with immigration, building supplies shortages and lack of workers all contributing.

At the end of his presentation, Bednar took an opportunity to give delegates an insight into his company, one of the larger aggregators in Australia.

He said the Finsure Group started in 2011 with “nothing”; the Victorian branch operated at the back of a coffee shop, and the Sydney branch above a chicken store.

However, since then the company experienced incredible growth and had recorded 15% growth in the past year.

This year Finsure expanded its reach into New Zealand and Canada may be next.

Bednar said by the end of next month Finsure would be working with a total of 3,000 advisors.

“We understand as brokers that it's more than just lodging loans, it's actually about running a business,” he said.

“One of the shortcomings in the Australian market, I think, personally, is the lack of education around being a business owner.

“Every one of those 3,000 brokers operates a business … so essentially, what we try and do is provide support around those six key metrics – time, presence, staff, customer experience, cash flow and market share.”

The International Mortgage Brokers Federation was the brainchild of Peter White, the managing director of the Finance Brokers Association of Australia and chairman of the global board of directors of the IMBF.

How does Australia’s competitive broking industry compare to others around the world. Comment below