Mortgage brokers once again the channel of choice for homebuyers

(ASX:AFG) Australian Finance Group Ltd data released today shows $20 billion in home loans lodged by AFG brokers for the third quarter of the 2024 financial year. This represents a 4.7 per cent increase in lodgements on the same period last year as a record number of homebuyers continue to seek the support of mortgage brokers to help them navigate the current challenging economic conditions.

AFG Chief Executive Officer David Bailey outlined the results: “The AFG Index for the third quarter of the 2024 financial year has recorded an uptick in lodgements across all states on the same period last year. A like-for-like comparison on Q3 23 shows the activity was led by Queensland, up 10.45%, South Australia up 13.24%, Western Australia up 6.78% and New South Wales up 3.86% on Q3 23,” he said.

Victoria recorded the lowest increase, 0.34% on the same quarter last year. “Victoria’s sluggish result is likely driven by the burden of recent land tax changes aimed at property investors in that state.”

The AFG Index data comes as latest industry statistics released by the Mortgage & Finance Association of Australia (MFAA) reveal that mortgage broker market share has lifted to 71.8%* for the final three months of 2023. “Australians know their broker is there to help them and the fact that brokers have a legislated duty to put their customers’ best interests first, makes them the clear channel of choice,” he said. “As bank branch closures continue across the country, brokers provide a vital distribution service.”

Despite the important role brokers continue to play, and the lower cost of customer acquisition model the channel represents for lenders, the increasing concentration of major lenders, margins and pricing remain challenging for non-major lenders.

The major lenders’ market share has crept up again to 61.7%, primarily due to those upgrading and refinancing their home loans, with only first home buyers favouring the non-major lenders. AFG Home Loans’ market share for Q3 24 is 7%, up from 5.3% in the same period last year.

AFG brokers have seen Investment lodgements increase to 31% from 28% and Upgraders lift by 1% to 39% on Q3 23. Refinancers have dipped to 27% from 31% at the same time last year.

“Further reinforcing Australian’s preference for variable rates, Fixed Rate volumes continued the trend of previous recent quarters and are now at an all-time astonishing low of 1.6% as homebuyers wait to see where interest rates head,” he said.

The national average mortgage size is up $5,000 from last quarter. “The average mortgage size was lower in New South Wales, however the Loan to Value Ratio was up suggesting increasing property prices in that state are having a small impact on affordability”, he said.

“Western Australia recorded the largest increase in average loan size of $10,000 which is not surprising given rising property prices in that state as well and is consistent with other industry data about property prices.”

The quarter saw Lender Turnaround Times from lodgement to unconditional approval at an equal series low of 17.2 days.

“Mortgage brokers continue to be the channel that delivers choice and convenience for Australian homebuyers,” he said. “In a high interest rate environment with cost-of-living pressures impacting us all, having a trusted broker onside to guide homebuyers through their options and help them secure the right finance to suit their individual needs continues to be vital.”

View full report here


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