Brokers flocked to major banks in March

The proportion of brokers recommending the big four to their clients rose to its second highest level on record, according to new data.

Analysis of the latest monthly Broker Pulse survey from Momentum Intelligence, which surveyed 250 brokers between 1–18 April, has revealed that 81 per cent of brokers used a major bank for their clients in March 2023, the second-highest rate ever recorded.

The figure was up from 74 per cent in February and was just shy of the record high of 82 per cent in September 2022.

The primary reason brokers cited for choosing a major bank was ‘client circumstances’, up from 69 per cent in February to 74 per cent in March, while product pricing placed second at 43 per cent.

However, non-major banks continue to be the dominant segment for brokers. Eighty-seven per cent of brokers used a non-major bank in March, up from 84 per cent in February, with more than three-quarters (77 per cent) citing interest rates as the primary reason.

Similarly, more brokers cited client circumstances (65 per cent) and turnaround times (51 per cent) as their primary reason for using a non-major bank in March compared to February.

Only 41 per cent of brokers chose a non-bank in March compared to 50 per cent in February.

ANZ tops lenders used by brokers

ANZ dethroned the Commonwealth Bank of Australia (CBA) in March to become the lender most commonly used by brokers.

It also managed to increase broker share, with 51 per cent of brokers telling the Broker Pulse survey that they submitted applications to the major bank in March, up from 42 per cent in February.

The number of business days taken by ANZ to reach an initial credit decision has reduced drastically to between four and six days over the last few months, as ANZ and other lenders have embarked on a digital arms race to reduce turnaround times.

Almost half (45 per cent) of brokers used CBA in March, down 3 percentage points from February, according to the data.

National Australia Bank and Westpac received an equal share of applications, with 30 per cent of brokers using them in March.

Commenting on the trends, Momentum Intelligence director Michael Johnson said: “The major banks have continued to provide brokers with great experiences. ANZ in particular has seen some strong improvements over the last 12 months.

“Broker Pulse community members have recognised these changes and been providing feedback to help these lenders further understand how they can continually improve and maintain these great experiences for brokers.”

Major bank dominance continues

The data builds on other similar findings from the third-party channel. The Australian Finance Group’s (AFG) latest mortgage and competition index for the third quarter of 2023 financial year (January to March 2023) found that the major banks once again grabbed market share from non-major banks.

Lodgements rose by 2.2 percentage points to 61.8 per cent, the highest level since the final quarter of 2020.

AFG chief executive David Bailey attributed this rise in market share to majors continuing to benefit from lower funding costs due to the government’s term funding facility, a lag in passing on deposit rate increases to customers, and “the prevalence of sub-economic cashback offers”.

Before this, the latest Industry Intelligence Service (IIS) report by the Mortgage and Finance Association of Australia (MFAA) found that the proportion of broker-originated home loans settled with the major banks rose in the September 2022 quarter, up 6.0 percentage points to 47.2 per cent.

Reflecting these trends, the latest monthly authorised deposit-taking institution (ADI) statistics for February 2023 released by the Australian Prudential Regulation Authority (APRA) showed that owner-occupied housing loans increased in all four major banks.

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