Key implication: With brokers controlling the majority of mortgage flow, distribution has become the decisive battleground. Lenders that treat brokers as strategic partners — and invest in AI to accelerate credit decisioning, elevate compliance and personalise product fit — will capture outsized share without sacrificing margin. Those that do not will pay more for volume and struggle to defend returns.

Market context: a dominant channel becomes the default

Industry data points to a structural, not cyclical, reshaping of mortgage origination in Australia. The Mortgage & Finance Association of Australia (MFAA) reported record broker penetration in mid‑2025, with share around 77% of new mortgages. Coverage through The Adviser indicates the level remained elevated in the September 2025 quarter, and Australian Broker noted Australians are increasingly turning to brokers for guidance in a highly competitive market.

When a single distribution route controls discovery and advice, market power rebalances. The Australian Competition & Consumer Commission (ACCC) has long highlighted how gateway concentration affects outcomes. Its 2024 update confirmed Google’s near‑94% search share domestically — a useful analogue for understanding how a dominant gateway can shape choice, pricing visibility and participant behaviour. Mortgage brokers are now that gateway for home loans.

Case in point: reporting in late 2025 linked Macquarie Bank’s mortgage market share gains to its broker-first strategy and digital execution. The signal is clear — distribution excellence plus operational speed can trump branch scale.

Business impact: the new unit economics of origination

For CFOs and heads of distribution, three economic levers now define performance:

• Acquisition cost and margin mix: In a broker-led market, lender acquisition costs skew toward broker remuneration and service-level commitments. While this can pressure front-book margin, it often reduces fixed costs tied to proprietary distribution and improves variable cost alignment with volume.
• Flow velocity and conversion: Turnaround time to unconditional approval is now a revenue variable, not an operational metric. A one-day faster credit decision can swing broker preference and future pipeline. In practical terms, fast, predictable SLAs and responsive scenario support materially lift win rates.
• Lifetime value (LTV) hygiene: With front-book compression, the retention engine becomes profit centre No. 1. Better onboarding, targeted repricing and proactive service reduce refinance churn. The broker channel can be an ally here if lenders provide transparent retention pathways that preserve the broker’s client relationship.

The strategic conclusion: instead of fighting the channel, optimise to it. Product simplification, policy clarity and consistent credit decisions are worth more in a 77% broker world than incremental rate tweaks.

Five Forces redux: distribution power has shifted

Applying Porter’s Five Forces to mortgage origination in 2025 highlights why this shift is sticky:

• Bargaining power of buyers: End-customers lean on brokers to navigate price, policy and risk. Brokers aggregate consumer demand, increasing their negotiating leverage with lenders.
• Bargaining power of suppliers: Lenders lose some pricing power as products are benchmarked side-by-side on broker platforms. Policy idiosyncrasies become friction, not differentiation.
• Threat of substitutes: Direct-to-bank origination competes poorly on convenience for most segments. Digital direct can work for prime, simple cases — but brokers win complex, high-value scenarios.
• Threat of new entrants: Non-banks can plug into broker aggregators quickly, lowering distribution barriers. This intensifies price competition but rewards operational excellence.
• Industry rivalry: Elevated; visible comparison compresses spreads. Rivalry shifts from price-only to speed, certainty and broker experience.

In short, the competitive frontier has moved from branch networks to API-enabled broker ecosystems.

Technical deep dive: where AI shifts the curve

Australia’s policy stance is supportive of responsible AI adoption. The Commonwealth’s 2024 policy update underscored an intent to lead on safe AI use in the public sector; as Lucy Poole noted, “This policy will ensure the Australian Government demonstrates leadership in embracing AI to benefit Australians.” The nation’s AI Ethics Principles (2019) set clear guardrails — human-centred values, fairness, accountability — that lenders and broker platforms can operationalise.

Practically, three AI capabilities are ready for production and directly accretive to broker-lender performance:

• Automated document intelligence: OCR plus machine learning to extract, normalise and verify payslips, bank statements and tax returns. Well-tuned models flag anomalies (income variability, undisclosed liabilities) and reduce manual touch. This can compress time-to-approval from days to hours for standard files.
• LLM-enabled policy and scenario engines: Retrieval-augmented generation (RAG) over credit policy and lender matrices allows brokers to query edge cases in natural language and receive auditable, policy-grounded responses. This cuts back-and-forth and improves first-time-right submissions.
• AI-assisted compliance trails: Best Interests Duty demands transparent rationale. Generative AI can draft advice records with citations to product data and client goals, while preserving human oversight. Structured logs support internal audit and ASIC expectations.

Australia’s AI ecosystem research (2025) highlights a gap between adoption and commercialisation. Mortgage distribution is a ripe test bed to close that gap: the data are structured, the processes are repeatable, and value capture is immediate in cycle time, accuracy and conversion.

Implementation reality: governance, integration and the broker experience

Execution determines ROI. A pragmatic roadmap for a lender or large brokerage:

• 90 days: Stand up a secure data pipeline from broker CRMs; deploy document intelligence on a narrow product set; publish real-time SLA dashboards to broker partners.
• 180 days: Integrate LLM-based policy assistant with retrieval from source-of-truth policy repositories; enable scenario modelling in broker portals; implement human-in-the-loop controls with immutable audit trails aligned to Australia’s AI Ethics Principles.
• 360 days: Expand models to complex income types; deploy proactive retention prompts triggered by risk of refinance; run controlled pilots on personalised pricing subject to responsible AI checks.

Risk controls matter. Ensure model outputs are explainable; measure disparate impact across customer cohorts; ring‑fence personally identifiable information; and maintain override mechanisms. Align training and monitoring to the government’s responsible AI policy stance and industry obligations, including the Best Interests Duty for brokers.

Outlook: consolidation, platformisation and the new playbook

With broker share entrenched around the high‑70s, expect three shifts over the next 12–24 months:

• Platform consolidation: Aggregators with superior data and workflow tooling will attract high‑performing brokerages, compounding distribution power.
• API-first lender strategies: Lenders will differentiate on integration quality — instant status updates, granular policy explainers, and consistent decisioning — not just headline rates.
• Digital standouts gain share: As seen with Macquarie’s broker-aligned ascent, institutions marrying digital straight-through processing with broker-first service will outgrow peers.

The lesson from other dominant gateways is instructive. The ACCC’s 94% Google statistic illustrates how quickly ecosystems coalesce around convenience and transparency. In mortgages, brokers have earned that role. The winners will be those who design products, processes and AI capabilities for the channel we actually have — not the distribution we wish we still owned.

Actionable playbook for leaders

• Rebase KPIs: Track broker NPS, time‑to‑conditional approval and first‑time‑right submission rates alongside price competitiveness.
• Invest where it compounds: Fund broker portal UX, policy clarity and decisioning APIs before incremental rate spend.
• Build responsible AI into the core: Adopt the Australian AI Ethics Principles as design requirements; embed auditability and human oversight from day one.
• Share the retention dividend: Co-design retention protocols with brokers to reduce churn while preserving the adviser relationship.
• Simplify product to accelerate flow: Fewer, clearer policy rules beat baroque product menus in a broker-dominated market.