Broker usage of big 4, non-banks falls

Fewer brokers reported using major banks and non-banks for their clients in October compared to the previous month, new Broker Pulse data has shown.

Results from the latest monthly Broker Pulse survey from Momentum Intelligence found that there was a 14 percentage point drop in the proportion of brokers using non-banks and a 12 percentage point drop in those using major banks in October 2022.

The survey of 234 brokers — conducted between 1–15 November — revealed that 70 per cent of brokers recommended a major bank to their clients in October, down from 82 per cent in September 2022.

Only 44 per cent recommended a non-bank in October, compared to 58 per cent of brokers surveyed in the September Broker Pulse survey.

The proportion of brokers who used a non-major bank also trended downwards in October, although it was a smaller decline.

While 86 per cent of brokers used a non-major bank in September, this fell to 80 per cent in October.

Among those who used a major bank, a considerably larger proportion cited client circumstances as their primary reason (up from 49 per cent in September to 60 per cent in October).

Almost two-thirds of brokers (63 per cent) used non-banks due to client circumstances in October, up from 59 per cent in September, while 52 per cent used non-major banks for this reason (up slightly from 49 per cent in September).

As bank rates continue to rise, product pricing was a less attractive feature for brokers, with 36 per cent indicating this as their primary reason for using non-banks (down from 47 per cent in September) and 41 per cent indicating this reason for using major banks (down from 45 per cent).

On the other hand, 75 per cent of brokers said they used a non-major bank for product pricing in October, up from 72 per cent in September.

The Reserve Bank of Australia (RBA) announced a Melbourne Cup Day 25-bp rate rise on 1 November, raising the official cash rate to 2.85 per cent.

The rate rise immediately began to flow through to first-moving lenders with all the major banks and Macquarie Bank passing down rate hikes to their borrowers.

Only a quarter of all surveyed brokers said they used major banks and non-banks for turnaround times in October (down from 35 per cent and 39 per cent in September, respectively).

Half of all brokers said they used non-major banks for turnaround times in both September and October.

Macquarie Bank was the most commonly used lender with 37 per cent of brokers submitting applications to the non-major bank in October.

Despite an overall fall in the usage of major banks by brokers, they occupied top positions among lenders most commonly used by brokers last month.

Indeed, ANZ was the second most commonly used lender (35 per cent), followed by the Commonwealth Bank of Australia (31 per cent), National Australia Bank (27 per cent), and Westpac (25 per cent).

Commenting on the results, Momentum Intelligence director Michael Johnson said: “The rapidly evolving interest rate environment is testing lenders to evaluate their pricing and positioning in the third-party channel.

“This is likely to impact which lenders brokers are turning to for the best deals and may translate into short-term market share growth for the lenders who hold their rates lower.”

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