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The rise (and rise) of mortgage brokers
The Mortgage & Finance Association of Australia (MFAA) recently released data that tells an undeniable story of mortgage brokers’ dominance in the home loan market.
For the December 2024 quarter, mortgage brokers wrote 76 per cent of all new home loans setting yet another record.
The total loan volume facilitated by brokers hit a record high of $115.06 billion for the quarter, marking a 22 per cent increase compared to the previous quarter’s figure of $94.06 billion.
Indeed, last year, the value of home loans settled by mortgage brokers hit historic records. So, it’s no wonder banks are feeling the pressure.
ABC News summed it up in June last year: “If you want to know why banks are unhappy with the growth of brokers, a round figure will help: $100 billion.”
Why mortgage brokers are the ‘golden gods’ of our economy
When people new to the industry find out what a mortgage broker does, they think they’re a middleman between banks and borrowers.
They are not. They are trusted advisers, industry educators, and problem-solvers.
I would go far as to say that they are the “golden gods” of our economy.
Their influence is evident in the knowledge sharing and value they bring to the market.
With brokers providing this level of expertise and guidance, it’s no surprise that Australians are turning to them in record numbers.
There are several factors that have contributed to the totally unsurprising surge in mortgage broker popularity.
1. Lending is so complex that brokers are desperately needed.
Lenders across the market have made it harder for borrowers to navigate the home loan process.
We’re experiencing stricter lending criteria, shifting interest rates, and varying product offerings.
It’s become so complicated (and indeed so difficult for many) to actually get a loan that even the Australian Parliament decided to launch a parliamentary inquiry last year to investigate the hurdles of home ownership.
The Senate’s report in November 2024 heard evidence that: “[B]anks were increasingly lending only to people with higher incomes and that mortgages were becoming ‘luxury products.”
And if you try and get a loan? The menu of offerings is incredibly varied that borrowers need guidance more than ever before.
Mortgage brokers are there to simplify this complexity, helping clients find the right financial product without suffering a migraine.
2. Brokers can help borrowers ‘cut through the noise’ and get the best deal
With multiple lenders competing for business, mortgage brokers ensure borrowers get the best deal.
They normally have access to dozens of lenders, negotiating better terms than the average customer could achieve alone.
Anja Pannek, CEO at MFAA told the Senate: “[A] mortgage broker’s ability to access dozens of lenders and hundreds of products drives choice and, importantly, competition in the home loan market.”
Mortgage brokers are legally obliged to act in the best interests of their clients when providing credit assistance, a duty now imposed by ASIC Regulatory Guide 273.
3. Brokers save time, stress, and headaches for everybody (banks and consumers)
For busy professionals and families, dealing with multiple banks is an overwhelming and time-consuming process. Brokers streamline everything, handling the paperwork and negotiations on behalf of their clients.
Last year, NAB Consumer Sentiment Survey confirmed what we all felt consumer stress is high. And brokers feel that stress, too.
One broker told The Adviser: “You can’t help at times take on your customer’s stress and brokers, generally, they really care about the people that they’re placing into [loans]; these are long term relationships in many cases.”
For banks, brokers also make the loan application process seamless and simple. They often know how to present an application in the best way that suits the lender’s guidelines.
Indeed, mortgage brokers have never been more valuable. But despite their dominance, challenges lie ahead.
The key looming threats facing mortgage brokers (and how to tackle them)
We live in the age of mortgage brokers now. But they’re always facing problems.
They must remain vigilant, in light of threats to their continued success:
1. An increasingly sceptical market
Despite their growing influence, some segments of the market remain sceptical about mortgage brokers.
Just two years ago, the Australian Securities & Investments Commission increased penalties for brokers who don’t comply with the law – the maximum penalty for individuals is now $1.57 million or “three times the benefit obtained and detriment avoided”.
Misconceptions about brokers still persist, with critics (even some coming from banks) saying that brokers might prioritise commissions over clients’ best interests.
But regulatory scrutiny, combined with past industry scandals, means brokers must work hard to maintain transparency and trust.
The solution? Education. The more brokers communicate the value they provide – and the way their remuneration structures work – the more trust they will build with clients.
“Our industry prides itself on our integrity, low complaint rate and our work with government and regulators to always protect consumers. We are legally obligated to act in the customer’s best interest,” said one broker to Broker Daily last year.
2. Low-quality clients
Mortgage brokers, especially when they start out, constantly face the threat of being flooded by poor-quality clients.
And in fact, the increase in broker-assisted loans has also led to an influx of lower-quality clients – borrowers who may be financially stretched or have minimal savings.
Curiously, analysis from 2016 found that broker clients are slightly more likely to default on their loans.
While brokers do their best to secure suitable financing options, they can’t control market forces that may push some borrowers into financial distress.
Focusing on these clients, unfortunately, ‘distracts’ brokers from the clients who are responsible for growing their business.
Keeping laser-focused on the ‘big fish’ (high-quality clients that bring home the bacon), if you will, is integral to helping them grow their brokerages and take them to the next level.
3. Bad macro-economic policy
Government policies and economic conditions (everything from budget forecasts to RBA-imposed interest rates) play a significant role in the lending market.
High inflation, restrictive lending regulations, or poorly designed housing policies can impact brokers’ ability to secure loans for clients.
For example, sudden changes to responsible lending laws or shifts in monetary policy by the Reserve Bank of Australia (RBA) can drastically affect borrowing power.
Things aren’t faring too great now (March 2025).
Thanks to the RBA not doing much, there are around 973,000 people or 17.4 per cent of mortgage holders who are considered “extremely at risk of mortgage stress”.
This escalates way beyond decade’s long-term average of 14.6 per cent.
Brokers of course must stay agile, informed, and ready to adapt to evolving economic conditions.
4. Artificial intelligence (AI) and automation
AI is reshaping financial services. Mortgage broking is no exception.
Just take a look at HAILO, a one-page home loan application by Julian Fayad’s team at LoanOptions.ai. It is nifty. It is attractive. HAILO is specifically built to help brokers streamline their offering.
Digital lenders and AI-powered loan-matching platforms are becoming more sophisticated, threatening to replace human brokers in certain segments of the market.
But technology alone cannot replace the human touch.
While AI can streamline processes, it lacks the personalised service, tailored advice, and emotional intelligence that brokers provide.
“In lending it is all about the nuance and interpretation,” according to one broker who spoke to Broker Daily this month.
AI “can’t hold a client’s proverbial hand through the process of giving them any kind of comfort or confidence that things are correct”.
The smartest brokers will integrate AI into their businesses – using it to enhance their services rather than replace them.
How mortgage brokers can continue ‘reigning supreme’ well into the future
Despite these challenges, the future remains bright for mortgage brokers.
But only if they continue evolving with the times.
They’ll need to:
- Get smart with AI and automate as much routine as possible, so they can continue focusing on high-value client interactions.
- Educate their value across every platform they can – through social media, blogs, and webinars – so they cement expertise in the market.
- Always keep up with regulatory changes, economic trends, and shifts in consumer behaviour.
- Focus on targeting the clients that make them happy and grow their business (not the clients that keep them stuck).
We are living in the age of mortgage brokers. It’s a great time to be in the industry. But staying at the top requires constant adaptation, innovation, and commitment. For now, brokers should enjoy their reign, but keep one eye on the future.
Gee Taggar is the managing director at Archer Wealth.