Macquaire Bank's exit from mortgage lending in March 2008 took the market by surprise – and left a sour taste in the mouths of many brokers and consumers.
In a statement released at the time, Macquarie’s decision was said to have been prompted by the “conditions in the cost of funding mortgages”.
Throughout 2009, rumours persisted that the lender was set to stage a comeback. In September, the bank’s head of mortgages refused to be drawn on the issue except to say that Macquarie was keen to re-enter the market at some future time.
That time appears to have come. Macquarie is cautiously testing the waters, teaming up with its aggregation partner AFG, in which it is a cornerstone investor, to conduct a small-scale trial of a new product offering.
But will brokers – burnt by the lender’s sudden exit – come to the party this time around?
“Macquarie has been monitoring the market for some time and looking at a variety of opportunities. Our focus has been very much on building our diversified funding strategy and building a sustainable business for the long term,” says a Macquarie spokesperson.
The spokesperson said the Macquarie/AFG trial was aimed at gauging broker appetite for the product and would hopefully result in a broader distribution of the lender’s products. But they would not be drawn on the timing.
“We are in the very early stages of our trial and as such, we don’t have any update on when an offering may be available to the market more widely,” the spokesperson says.
AFG general manager sales and operations Mark Hewitt is confident the trial will prove successful and encourage Macquarie to stage a full-scale return to mortgage lending.
“As the trial was launched just before Christmas, it is too early to understand the impact it has had on our brokers,” Mr Hewitt says. “However, I think it [the trial] is a good sign for both Macquarie and the industry as a whole.”
Taylored Financial Solutions director Richard Taylor agrees.
“The timing is good, very good,” says Mr Taylor.
“Access to wholesale funds is improving, which is ultimately helping boost competition in the sector and Macquarie’s decision to re-enter the market will only serve to boost competition further.”
But while Mr Taylor says Macquarie’s re-entry will benefit both brokers and consumers, he is wary of using the lender’s services.
“They pulled out once, which infuriated a lot of people, and there is nothing to say that they won’t do it again,” he says.
“In order for them to make any impact on the market or the broker channel, they would want to be offering a suite of products that is competitively priced and not like anything else currently available.”
Auspak Financial Services co-founder Mark Mellick says Macquarie would be wise to take the time to sit down with brokers and discuss with them how the lender can differentiate its offering.
“A lot of brokers and consumers were left feeling burned when Macquarie left the market so suddenly in 2008,” Mr Mellick says. “Brokers have a long memory, so I think it will be a while before they can trust the bank again.”
He suggests Macquarie “hold a launch party for their product when they are ready to expand their distribution channel beyond AFG and let brokers know exactly what they can expect”.
“They should give their broker channel an overview of their new and improved services as well as a holistic overview of the company,” he says.