According to the latest Mortgage Business straw poll nearly 86 per cent of mortgage businesses are considering or have already diversified.
Of the poll’s respondents, 49 per cent said that they were planning to diversify, while 35 per cent had already taken action.
Only 16 per cent of respondents did not plan to diversify.
Tough market conditions have prompted businesses to rethink their strategies, and diversification looks set to dominate a rapidly changing lending landscape.
Managing director of Choice Aggregations Services Michael Russell told Mortgage Business that with the brakes being applied to current credit growth, those businesses that invest in diversification will be rewarded for their efforts.
“The need to insulate businesses from competitive threats is more apt than ever and diversification is a key defensive strategy,” Mr Russell said.
While a great advocate for diversification, Mr Russell said that it is essential that businesses have the right expertise to effectively sell and provide good support for any new product lines they decide to take on.
Mortgage manager Australian First Mortgage (AFM) highlighted current market conditions as a major influence in its decision to launch new mortgage servicing business LoanAxis.
AFM director of sales and marketing Iain Forbes said LoanAxis, which offers sub-origination, credit processing and back office servicing to mortgage managers, was the perfect approach to utilise AFM’s resources.
“In today’s declining market, rather than having to terminate staff, diversifying our business enables us to utilise existing resources and thereby generate additional income,” Mr Forbes said.
Cathy Dimarchos, national manager of operations and business development with commercial lender Sintex, said the stability of income flows makes a diversified business model appealing.
“Diversification means you no longer need to rely on just one type of clientele or market,” she said. “By diversifying into commercial property, for example, businesses are better insulated should a down turn in residential property occur, and vice versa.”
Mr Forbes however closed with a word of warning: “While anyone can say they want to diversify, it takes expertise to get it right.”
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