Brokers, loans on the rise in Tasmania

1,838 loans lodged in the Apple Isle in six months

Brokers, loans on the rise in Tasmania

The number of mortgage brokers in Tasmania is on the rise and so are the number of loans they have lodged, according to the latest research from the MFFA.

The MFAA Industry Intelligence Service 16th Edition Report, which covers the six-month period from October 1, 2022, to March 31, 2023, revealed  there were 141 brokers working in Tasmania during that period – up slightly from 135 compared to the year before

According to the MFAA data, those brokers lodged on average 13 loans, equating to a total of 1,838 loans  for the state for that period, up 26.58% compared to a year ago, at 1,452.

The figures come as no surprise to Hobart-based Derwent Finance’s CEO Rhianna Farnan (pictured above left) who said she had seen the Tasmanian broker sector expanding.

Farnan said over the past 18 months, her company had welcomed eight new team members, all of whom were new to the industry.

“Some have transitioned from prior roles in lending, including home lending and underwriting, while others have joined through our internship program in collaboration with the University of Tasmania,” Farnan said.

Mortgage sector has been overhauled

Farnan said the mortgage broking sector had undergone a comprehensive overhaul and complete modernisation since she became involved in the industry seven years ago.

She said the transformation could be attributed to the contemporary marketing strategies that had successfully dismantled existing stigmas associated with mortgage brokers.

Farnan attributed the changes to the support and communication from organisations such as Finance and Coffee, the FBAA and MFAA, and aggregators who had made substantial efforts in organising events and fostering a sense of community.

“Despite being a subject of controversy among the public, and notwithstanding the fact that financial gain isn't the primary motivator for individuals entering the industry, the possession of a trail book offers a notable sense of financial security,” Farnan said.

“This sets the mortgage broking profession apart from other commission-based industries.”

Different paths to becoming a broker

Farnan said an increasing number of individuals were opting out of traditional university paths, recognising that success could be achieved in industries, such as broking, without incurring the significant costs and time commitments associated with higher education.

Despite the sector’s appeal, the MFAA data showed that brokers earned $89,859 average annual gross up-front commission for the period, compared to $106,496 the previous year, and $54,652 gross trail for the period, compared to $44,937 last year, for a combined gross commission of $144,511.

In total, this was down by 4.57% from a year ago.

The MFAA data also revealed there had been a decline in the number of loans Tasmanian broker settled.

According to the MFAA, brokers settled $974.62 million in home loans compared to $1.11 billion during the equivalent 2021–22 period, down 11.9%.

There was growth in value of the state’s overall home loan book, up by 21.4%, from $4.04 billion to $5.14 billion.

On an individual basis, the average broker settled $6.91 million in home loans for the period per broker, down 15.63% year-on-year, from $8.19 million.

Year-on-year the value of the average loan book increased to $36.43 million per broker, from $29.96 million a year ago, up 21.60%.

Decline in loan settlements expected

Farnan said the decline in settlements in Tasmania for the period of October 2022 to March 2023, as highlighted in the MFAA report, was understandable given the current circumstances.

“Unfortunately, the absence of a stamp duty waiver for first home buyers, coupled with a reduced benefit of only a 50% discount when purchasing a home, has impacted the market,” Farnan said.

“Additionally, the limitations of the first home guarantee scheme, applicable only for properties under $600,000 in capital cities and $450,000 in the rest of the state, present challenges.”

Farnan said finding a suitable family home within these price ranges could be challenging unless prospective buyers had a guarantor or access to assistance in saving for a deposit, making it increasingly difficult for home buyers to enter the market.

“Despite the decrease in settlements, our experience indicates a sustained interest from both first-time and second-time buyers, as evidenced by consistent enquiries, however, there has been a notable reduction in the number of these enquiries translating into finalised settlements,” she said.

“Looking ahead to 2024, the market's trajectory remains uncertain, with challenges persisting for prospective home buyers in navigating the current affordability constraints.”

However, a PropTrack Market Insight report released at the end of last year found 36% of Australian homes are cheaper to buy than rent, with Tasmania one of the top locations offering the highest proportion of homes where would-be buyers should take the plunge.

Farnan said her company had clients all over Australia and therefore was not struggling to find business and settlements.

The MFAA research shows Tasmania is home to less than 1% (0.7%), of the national population of brokers, and Tasmanian brokers settled 0.6% of the national value of home loans settled.

MFAA CEO Anja Pannek (pictured above right) said her organisation’s report reinforced feedback from members about the impact interest rate rises and record levels of refinancing were having on brokers and their clients.

“The period covered in the report coincided with a period of intense refinancing as fixed rate mortgages reverted to variable, clients encountered serviceability constraints and a moderation of property prices in some markets,” said Ms Pannek.

“This confluence of factors can be seen in this industry research; however, the outstanding service mortgage brokers deliver to their clients has remained a constant throughout this time.”

During the period, nationally mortgage brokers maintained a strong market share, writing 69.6% of all residential home loans in the March 2023 quarter, while in the 12 months to March 2023 mortgage brokers settled a record $358.68 billion in home loans.

The report also shows that in comparison to the October 2021–March 2022 period, the total value of loans settled by mortgage brokers nationally declined 8.63%.

However, Pannek noted that despite this fall the broker channel outperformed the overall home loan lending market nationally.

Do you work as a broker in Tasmania? What are some of your challenges? Share your thoughts below