Interest rate pause doesn’t slow brokers

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While the economic landscape will no doubt shift, and the challenges and opportunities facing borrowers will ebb and flow, the value of mortgage brokers will remain strong, just as we have seen in 2024

AFTER 18 MONTHS of interest rate increases that had brokers and borrowers glued to the Reserve Bank of Australia’s monthly press conferences, 2024 saw the cash rate remain unchanged – at its highest level since 2011. However, the respite in interest rate increases did not lead to a slowing in finance activity. With inflation still high and continued cost of living pressures, borrowers remained focused on options around refinancing to manage household budgets. Against a backdrop of tighter serviceability and strong property price growth, borrowers worked with their brokers to understand their options. And mortgage and finance brokers haven’t faltered, offering the kind of expert guidance that today’s borrowers need to make smart decisions in an unexpected environment that many still find daunting.

The Mortgage & Finance Association of Australia (MFAA) is the leading professional association for the mortgage and finance broking industry and has over 15,500 members. Over 97% of our members are mortgage and finance brokers. We also represent aggregators, lenders, mortgage managers, mortgage insurers and other suppliers to the industry. Our purpose is to empower our members to prosper and thrive, ensuring Australians benefit from competition and choice. We support our members and the industry through advocacy, education and promotion of the broker value proposition to consumers.

Anja Pannek, MFAA

We all know that long gone are the days when the majority of Australians walked into their local bank branch to chat to a manager about getting a loan. Today’s borrowers understand that they have options beyond the big four banks, with access to a variety of lenders and niche products, and an unprecedented level of transparency in the lending market – all facilitated by mortgage brokers. Whether they’re buying a home, refinancing an existing home loan, growing wealth through property, or seeking financing for their business, Australians are coming to mortgage and finance brokers to make the most of the variety of products and lenders available to them. In 2024, mortgage broker market share reached a record high, with brokers now writing more than seven out of every 10 home loans in Australia. As MFAA CEO Anja Pannek explains, broking is a referral-based business, and this isn’t an achievement that happened by chance. “The strong market share growth of mortgage brokers is a testament to consistent, positive outcomes brokers are delivering to their clients.”

Anja Pannek, MFAA

The rise in refinancing over the past two years has also put the spotlight on one of the most significant pain points for brokers and borrowers alike: unnecessary delays in the home loan discharge process, an area the MFAA has long advocated for change on. One big issue that has come to light during the refinancing surge of the past two years is the slow and cumbersome home loan discharge process. “It’s a frustration shared by brokers and borrowers alike, with missed settlements, extra fees, and interest piling up because of unnecessary delays,” says Pannek. “Removing inefficiencies in the discharge process needs to be a focus for all lenders. Friction is the last thing borrowers need when they are seeking certainty and speed. Focusing on better customer outcomes is key. In contrast to the pause of interest rate changes, the pace of change when it comes to technology has been anything but slow in 2024.” One of the most significant technological developments this year has been the rising interest in, and use of, generative artificial intelligence (AI) in the mortgage and finance broking industry, which has sparked both excitement and healthy scepticism.

AI holds the potential to revolutionise the mortgage broking industry, increasing the value brokers bring to clients by improving productivity and streamlining administrative processes, but it must be done in a safe and ethical manner. Rather than viewing AI as a threat to the role of a broker, the MFAA sees it as an opportunity for brokers to enhance the client experience without relying on investment from other players in the industry. To provide a framework and guidance for mortgage and finance brokers looking at ways they can leverage AI in their businesses, this year the MFAA released a discussion paper that explores the transformative potential of AI technologies for broking businesses, while also addressing critical issues relating to ethics, compliance and consumer protection. “AI is not here to replace the broker,” Pannek states. “It’s here to enhance the value that brokers offer by allowing them to focus more time on what they do best – helping their clients achieve important life goals like a home for their family or building future wealth through property.” That human element of the broker-client relationship is a key part of what drives clients to brokers, and the MFAA’s view is that all Australians should know they have the option to talk to a broker.

“Even though a refinancing borrower has been through the mortgage application process before, the knowledge a broker can provide is extremely valuable, and the dynamic economic landscape we’re in today has highlighted that”

“AI is not here to replace the broker. It’s here to enhance the value brokers offer by allowing them to focus more time on what they do best – helping their clients achieve important life goals like a home for their family or building future wealth through property”

Published 11 Nov 2024

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High approval rates

of home loans in the June 2024 quarter

73.7%

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The MFAA’s research over the year has highlighted that many brokers – in fact 90% – say they have clients coming to them for the first time to refinance. This is in addition to the high percentage of other types of borrowers, for example first home buyers, who use the services of a broker. “Even though a refinancing borrower has been through the mortgage application process before, the knowledge that a broker can provide is extremely valuable, and the dynamic economic landscape we’re in today has highlighted that,” says Pannek.

Mortgage brokers wrote

Source: MFAA

The campaign highlighted several important reasons why choosing an MFAA-accredited mortgage broker is important, including that they are required to maintain the highest level of qualifications and ongoing professional development in the industry. As we head into 2025, the big question remains: where will broker market share go next? While it’s impossible to predict with certainty, Pannek is confident that more Australians will continue to discover the value of working with mortgage and finance brokers in the coming years. “Regardless of the direction interest rates take, Australians have discovered that brokers offer more than just access to loans,” Pannek says. “They provide personalised advice and drive competition for the benefit of borrowers through providing choice – all with superior consumer protections – something that’s becoming increasingly important as the lending landscape continues to evolve.”

“More than seven out of 10 home loans are written by mortgage and finance brokers; that means nearly three out of 10 borrowers may not know what a broker can do for them – let alone all those Australians who think that they can’t buy a home, or secure business financing, because they don’t know what their options are,” says Pannek. Keeping mortgage brokers top of mind for Australians was the goal of the MFAA’s digital consumer campaign this year. Pannek explains that the campaign guided prospective homebuyers to the association’s Find a Broker site, making it seamless for consumers to connect with an MFAA Accredited Broker near them.

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