The Australian mortgage broking industry recorded its highest ever market share of 68% in the June 2022 quarter. That’s a 23.58% year-on-year jump. And an 81.97% increase from the same quarter in 2020.*
Here are the top team, technology and market trends that are shaping the transformation of mortgage broking in 2022 and beyond. (Scroll down for a full analysis).
* https://www.mfaa.com.au/news/mortgage-brokers-achieve-strongest-june-quarter-on-record
I hope you found this infographic useful. Now here’s a longer form version of the Mortgage Broking Industry Trends for 2022:
1. Remote Advice Is Accepted & Expected
Borrowers and brokers have become accustomed to remote sales and “paperless” advice, allowing consumers to “choose their own journey” and lowering barriers to entry for new businesses.
Brokers who only provide in-person advice have become a rarity. Instead, most opt for a hybrid model (in-person and remote delivery) or a purely remote model. This is facilitated by:
- Web-conferencing via tools such as Zoom and Microsoft Teams.
- E-signing is becoming mainstream, and accepted by more and more lenders.
- Remote VOI (Verification Of Identity).
- Online client portals where clients can log in securely to provide information and access progress updates.
2. Compliance Is Here To Stay
The introduction of Best Interests Duty (BID) has placed higher expectations on mortgage brokers (while banks remain immune).
- Time Per File ⬆️ – broking teams are spending on average 40% more time per file compared with 5 years ago.
- Approval Timeframes ⬆️ – longer lender SLAs are a constant challenge for brokers working with clients in time-sensitive situations.
- Quality of Advice ⬆️ – many brokers believe that deeper analysis of Requirements and Objectives etc. leads to a more strategic and better quality solution.
- Remuneration ⏸ – despite the increase in workload and responsibility, renumeration remains the same. Brokers must therefore become much more efficient to grow.
3. The War For Talent Has Intensified
Record demand for brokers from borrowers is forcing business owners to consider creative new ways to attract, incentivise and retain A-players. In response to growing administration and compliance burdens, broking teams are applying specialisation and division of labour to maintain growth.
An increase in employment opportunities has placed upward pressure on wages, with many firms turning to salary+bonus remuneration structures. The rise of remote and hybrid work means wider geographic talent pools. And business owners are experimenting with new team compositions (or technological solutions) to remain competitive.
- More Brokers: firms are plugging more brokers into their proven business models, and individual brokers are joining forces to create a multi-broker presence.
- Parabrokers: teams are incorporating credit analyst roles to assist with policy, serviceability and product selection, allowing brokers to focus on client-facing advice.
- Client Service Managers: CSMs are more prevalent than ever, with a focus on all the customer-facing activity that fits around the core loan advice.
- Virtual Assistants: many teams are employing VAs to take care of process-driven data entry, document collection, loan tracking and more.
- Per-Deal Processors: many teams also rely on outsourced loan processors, either as an ongoing resource, or an overflow facility to handle spikes in demand.
4. Rise Of The Remote & Offshore Workforce
Increasing admin work and better digital collaboration tools have driven rapid growth in the offshore workforce. This frees up in-house people to perform higher-value work.
- WHERE: Philippines, India, Nepal
- WHAT: Data Entry, Loan Processing, Parabroking
- HOW: Detailed, documented workflows, combined with collaboration tools such as Zoom, Slack, BrokerEngine
5. BrokerTech Comes Of Age
Brokers are connecting apps to build “smart ecosystems” to stay ahead of rising costs and compliance obligations. Investment in tech continues to increase in pursuit of greater productivity gains. Typical broker tech stacks now include:
- Broker-centric CRMs
- Aggregator software (compliance focus)
- Best of breed tools for servicing, retention, information collection, etc.
- Connectors such as Zapier, make.com, etc.
- Supporting platforms for marketing, internal communication, scheduling, video conferencing, etc.
We expect to continue to see rapid developments in this space in the coming year and beyond.
6. Don’t Send A Robot To Do A Human’s Job
There are still plenty of tasks that technology can’t do. Mortgage brokers should focus on the things that can’t be automated. For example:
- Strategic advice
- Wowing the customer
- Concierge service
- Financial coaching
With a 68% market share, Australian borrowers clearly have a preference for working with a trusted broker. This is an advantage that we should capitalise on as an industry.
7. Ballooning Customer Expectations
As mortgage borrowers become more used to digital and technology-driven experiences and less used to dealing with humans IRL (In Real Life), they are starting to demand:
- Shorter response times
- Smoother experiences
- More choices
- Faster approvals
For many brokers, these demands may become unreasonable at times. Constantly educating clients, choosing clients carefully and not working with everyone are useful reminders to say sane and enjoy your work.
8. Transitioning From Excess Demand To Excess Supply
The property landscape has changed dramatically since last year. In 2021, many brokers found it easy to ‘skim the cream’ off the market and earn a good living from new business. The outlook for 2022 and beyond is more difficult. Here’s a comparison of then (2021) ➜ versus now (2022):
- Plenty of deals around ➜ Lower transaction volume
- High buyer urgency ➜ Buyers want to ‘wait and see’
- Record-low interest rates ➜ Rapid rate hikes
- Record deal sizes ➜ Property values forecast to decline by up to 20%
The strategies for success in 2022 and beyond include:
- Nurturing and retaining existing clients
- Repricing clients as rates rise
- Building a more lean and efficient business
- Diversifying offerings to protect existing business and maximise Client Lifetime Value (LTV)
9. Escalating Channel Conflict
Brokers and lenders share an uneasy relationship, aggravated by channel conflict:
- Two-speed turnaround times, with branches typically enjoying much faster SLAs
- Banks closing branches as consumers become accustomed to online advice
- Low-cost direct online offerings that cut out the broker channel
- Lenders notifying clients at key milestones (e.g. formal approval) before even the broker has been notified
- Branch-only offers & policies, with many stories of clients being turned down via the broker channel, then immediately approved at a branch
- Aggressive retention teams who swoop in with last-minute sweeteners to avoid losing clients
Despite these frustrations, the broker channel is still thriving on account of strong customer focus and a recognition by borrowers of the value that brokers add.
10. Ideal Mix of People, Process & Technology
Despite the challenges, brokers have a bright future. The most successful firms of the future will combine an ideal mix of people, process and technology:
- PEOPLE: smart people, focusing on high value sales, strategy and service.
- PROCESS: standardised processes and workflows to deliver “one way, best way” every time.
- TECHNOLOGY: tools and technology used where they can create efficiencies, not for their own sake.
Conclusion and Next Steps
The mortgage broking industry trends covered above are not a mystery – they are already upon us and accelerating every day.
The question is, how well are you positioned to take advantage of them? And what decisions do you need to make today in order to ensure your firm is able to ride on the crest of the wave?
If you’re interested in finding out how BrokerEngine software can help you apply Specialisation, Division of Labour and Process Excellence to deliver a 5-star customer experience at scale and settle more deals in less time, please register for our latest demo here.
