By Brendan O'Donnell, CEO Choice Aggregation Services
Events of the last few months have rocked the mortgage industry as we have witnessed the previously unimaginable collapse of a number of global financial institutions.
While there is little doubt that we are in a fortunate position here in Australia, we have not been immune from the fear and uncertainly that has swept the rest of the world.
A recent Mortgage Business straw poll revealed that a third of respondents expected a bank to withdraw from the broker channel. The findings of this poll were disturbing – not because there are any grounds for such fears, but because it is not a reflection of the true situation.
While I understand that some brokers are concerned, I can assure you that the banking industry remains fully committed to the broker channel. Brokers now command an influential share of the home loan market, highlighted by findings in the most recent Fujitsu/JPMorgan Australian Mortgage Industry Report:
“Having previously capped out at 38 per cent, and declining to 35 per cent subsequent to the global credit crunch, the proportion of all loans across the industry through brokers has recovered back to 38 per percent.”
It is therefore little wonder that banks are aware, and some are beginning to publically acknowledge, that a significant proportion of business is introduced from brokers.
We are amid a crisis of unprecedented proportions which has spread across the globe. The Australian financial system has so far remained relatively unscathed due to a tight regulatory approach and the transparency of our system.
The reality is that banks need the broker channel as a distribution outlet – especially now that consumers are more aware of the home loans options available to them and the diversity in products; brokers’ value proposition is only growing stronger.
Coupled with this is the growing focus banks have adopted to use this valuable distribution outlet to cross sell other financial products.
I’m in regular contact with every head of third-party banking and the message in every instance has been very clear: we are here for the long haul.
Over the last day or so the message from the RBA and the government has been one of renewed confidence that we, as a nation, will emerge from this crisis. While the coming six to twelve months are no doubt going to be tough for the third-party industry as a whole, government initiatives to stimulate the housing markets and alleviate pressure on borrowers all bode well for the industry.
In light of the results of the Mortgage Business straw poll, I encourage any broker with reservations over the banks’ commitment to this channel to give me a call.
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