This background paper provides information about two particular industry participants in the Australian mortgage broking market, mortgage brokers and mortgage aggregators, some features of the Australian mortgage broking industry and the main services provided by mortgage brokers and mortgage aggregators. This paper has been prepared (and charts have been constructed) using public information.
This paper illustrates the following key points:
a) The mortgage broking industry is a key distribution channel for residential mortgage financing in Australia, settling 55.7% of all residential home loans in the September quarter 2017;
b) Mortgage aggregators act as intermediaries between mortgage brokers and lenders, by providing brokers with access to lenders on their aggregator’s panel;
c) Residential property investors and residential owner-occupiers are the main customers of mortgage brokers, collectively accounting for over 75% of the customers of mortgage brokers;
d) Banks still finance the majority of the loans originated through mortgage brokers, although there is a modest increase in the volume of loans financed by non-bank lenders;
e) Mortgage brokers and mortgage aggregators do not charge borrowers directly for their services. Instead, they typically receive upfront and trail commissions from the lender.