Your mortgage broker and you: some insightful analytics
Some very interesting information was released by Macquarie Group in their annual mortgage borrowing capacity comparison and mortgage broker survey report. The key findings from their survey are:?
?? Pricing and time to approval remained the critical considerations for mortgage brokers and customers in 2021.?
?? Banks offered attractive fixed rates and cashbacks to recover market share. The front-to-back book gap increased further, which is masked by cashback (as Ben Affleck would say “Retainer!”) offers at the headline level, which they estimate adds 10-20bps to the implied discount (depending on mortgage size). The majority of brokers responded that the majors’ front-to-back book gaps were above the non-majors.?
?? Approval times deteriorated further in 2021, driven by banks battling to cope with increased volumes. While there was evidence of convergence in approval times across banks, the relative performance hasn’t changed materially. Across the majors, CBA continued to outperform peers.?
?? Brokers responded that ANZ and WBC took on average ~15-17 days for the initial file pick-up versus sector-leading times of ~2-3 days.?
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?? Brokers indicated that the majors (ex CBA) generally had inferior systems and cumbersome processes, with CBA remaining a positive outlier amongst the majors, and NAB narrowing the gap.?
?? Maximum borrowing capacity for owner-occupiers increased by ~7%, while it decreased by ~2% for investors. As a result, the borrowing capacity for Investors and Owner Occupiers has converged further (the difference is now <10%), reducing the historical anomaly.?
?? Brokers responded that ~38% of customers borrowed close to their maximum capacity compared to ~40% in 2020 and ~35% in 2019.?
?? Australian maximum lending capacity of ~7x gross income appears high in the global context (4.2-5.2x). As Macquarie Group highlighted in 'All good things must come to an end', unless credit conditions normalise on their own, they expect the regulator to step in with macro-prudential measures.
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