The mortgage broking industry is experiencing a pivotal shift in this post-Covid world.
We are part of an industry that has experienced its fair share of change in recent years. Through the trials of the GFC, to the Royal Commission, the mortgage broking industry has come a long way from its humble beginnings of providing mortgage comparison services and helping with loan applications.
The sector has now come of age and is experiencing solid growth, reportedly growing an average 6.1 per cent year on year between 2018 and 2023 according to industry sources.
There are three clear trends that will continue to drive the evolution of mortgage broking and aid the success of new entrants to the field.
1. Covid forced a major re-evaluation of careers and work-life balance.
As a part of the mortgage broking landscape, franchising is a business model that is well suited, or even designed for capitalising on rapid growth. Indeed, COVID triggered growth across many franchising sectors of the economy. From our own recruitment we know that a franchise opportunity holds great appeal for those seeking a new way of life in the post-Covid world. As swathes of people in the financial services sector came under pressure and faced redundancy, people re-evaluated their careers and sought greater control over their future.
There is also a widely held belief that during times of economic uncertainty, those leaving the corporate rat race will choose to invest in themselves rather than the job market. We found that people were buoyed by a taste of what true work-life balance could be like and were attracted to greater flexibility that comes with being a mortgage broker franchisee. The opportunity to jump on board a successful business model with a ready to deploy “playbook” has proven enticing to these people.
As such, a franchisee playbook, coupled with training and support has become a differentiator for franchise business models. Firms like ours are heavily investing in training and development to ensure that franchisees are set up for success and supported in their journey.
2. Successful businesses are underpinned by unwavering consumer demand
In an ongoing analysis of mortgage broker market share by Comparator, a CoreLogic business, mortgage broking as a proportion of all home lending exceeded 70% for the first time in 2022. The measure has been tracked for 40 previous quarters.
Market share is projected to remain high amid interest rate uncertainty, general population growth, support measures for first-home buyers, such as the Help to Buy scheme, and the much talked about ‘fixed rate cliff’. This fixed rate cliff will see almost $1billion in borrowing come off fixed rate products onto painfully higher revert variable rates over the next 12 months. We are seeing refinancing surge as people seek to reduce their outgoings by negotiating the ‘go to’ variable rate on mortgages with their current lender or find a new lender with a better rate.
3. A demographic shift in the industry is underway attracting a new breed of brokers well suited to service the needs of homeowners.
Our own research shows that millennial homeowners are significantly more likely than older borrowers to use a broker to navigate the mortgage market as interest rate rises bite, and fixed rate terms come to an end. This is even a significant increase from the reported 42.5% of millennial homeowners who used a mortgage broker five years ago when the cash rate was at 1.5%.
As ‘like attracts like’, younger generations see value in the role of a mortgage broker and we see evidence that this is bringing greater age diversity into the industry.
The future is bright.
Mortgage brokers and franchisees who are hungry to succeed and ready to take advantage of the extensive support to build a business have the opportunity to build something enduring and be part of the pivotal shift that’s underway.
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