Mortgage brokers have revealed how they have significantly grown their businesses since the introduction of two-tiered mortgage pricing and tighter lending conditions.
Geelong-based broker Warren Freeman told The Adviser that while he was initially daunted and frustrated by “the mandatory bureaucratic imposts”, he soon realised the only choice was to “harden up, put the head down and redesign all practices.”
This led him to find new ways of improving efficiency. It also meant tapping into business profits and employing staff.
“I have gone from 15 years of being a mobile broker doing home visits to being based in an office where clients visit me and my staff,” he explains.
“As a result, my business proposition is far greater for my clients. Referrers and customers recognise this superior offering and my settlements increased by almost 90 per cent in 2016 from the 2015 financial year.”
While the changes to his business have been expensive to implement, Mr Freeman says they have been necessary to cope with the compliance demands.
“My advice to any mortgage broker struggling to cope with the demands today is to invest in administrative support and to focus on what they do best, client contact and explaining lending options,” he said. “It is this personal experience that the client seeks from a broker and often evades them in a bank branch.”
Meanwhile, award-winning regional broker Robert Trewin admits that while stricter serviceability requirements have locked some customers out of the mortgage market, he has still managed to significantly grow his business.
“A lot of these policy changes are a reflection of city-centric economics that I can see the need for that unfortunately can adversely catch regional borrows in the crossfire, Mr Trewin said.
“An example is the increasing servicing requirements where in regional Australia we have not had the increases in wages that our city cousins have and our living expenses are significantly lower. I am seeing clients who could legitimately afford a home loan 12 months ago no longer being eligible due to failing to meet the servicing requirements even though their monthly living expenses are significantly lower than what we need to use as a minimum.”
Mr Tewin, who was named Regional Broker of the Year at The Adviser’s Australian Broking Awards in 2015, describes his Bairnsdale, Victoria-based brokerage as a “free flowing entity” due to ongoing lender changes.
“It has certainly been difficult to keep on top of, however given that I work within the business and only have a few staff we have been able to take on these changes immediately and implement new procedures and systems to handle the changes,” he said.
“The uncertainty in my opinion has bolstered my business and we in fact have had 60 per cent growth over the past 12 months, however we are spending a lot more time with our clients discussing their monthly living costs and documenting this.”