The major banks, and particularly CBA, appear to be making more “intelligent decisions” around mortgages and approving loans more frequently, a leading broker has suggested.
New statistics released by the Australian Bureau of Statistics (ABS) this week showed that the value of housing finance commitments declined by 2.5 per cent in November 2018, driven by a 4.5 per cent decline in investor lending and a 1.4 per cent slump in owner-occupied lending.
The banks have been reducing their risk appetites and asking more questions around expenses in recent months, with FirstPoint mortgage broker Jonathan Harris telling The Adviser that he believed the financial services royal commission was a main trigger for this renewed sense of caution last year.
“Our business is a big supporter of ANZ, but once the royal commission hit, you could really tell there was a sort of monumental shift from how they did things, the time it took, the amount of questions asked,” he said.
However, the FirstPoint broker suggested that the major banks, including CBA, had been making better credit decisions in recent weeks.
Speaking to The Adviser, Mr Harris suggested that the Commonwealth Bank was actively seeking broker-introduced mortgages and appeared to be actively trying to workshop scenarios and find solutions.
“CBA’s credit attitude has been the most impressive for me. They’ve been through the biggest change. You can really tell that they have been given the directive to find ways to do things, not find ways on how not to do them. So I think the CBA turnaround times are probably the biggest and more notable change we’ve noticed while working with the bank recently.”
The Cronulla-based broker suggested the change could be due to a plethora of reasons, including a resurgence of buyer sentiment (especially from first home buyers), but added that it may also be in response to negative sentiment from the broker channel following remarks made by CEO Matt Comyn last year.
Noting that the views of the major bank CEOs are “not always necessarily the views of the third party team who are there doing a really good job trying to support the broker channel”, Mr Harris added that he felt that the third party team at CBA had been “unfairly tarnished”.
Mr Harris said: “We try to treat the bank and its third party channel on its merits. And they’re doing really, really good things for us at the moment.
“We feel that their credit team are empowered to make intelligent decisions within their current policy. For example, if the deal is presented in the right way with the right notes and the right attention to detail, we’re getting approvals inside three business days without a phone call from a credit assessor. And the odd phone call that we get, it’s more around qualifications and things where the assessor is trying to find a way to get it to an approval status.”
The FirstPoint broker said that it appeared that there had been some sort of directive on the credit team to “stop the pushback, stop the deferrals and find a way top get it off your desk and a way to approve it within policy”.
While Mr Harris said that turnaround times were “exceptionally long” last year, he believed that the lenders were becoming hungry again for new business from the broker channel.
He added, however, that his brokerage had been making a “conscious step to go over and above in how deals are presented to the banks… with every box ticked and spending a lot of time and effort in the submission”.
According to Mr Harris, that had helped ensure that the brokerage’s turnaround times and decline rates were kept to a minimum.
Picking up on the news that broker share had recently hit 60 per cent, Mr Harris said that he believed borrowers were increasingly turning to brokers for personalised and personable service.
“These days, you go into much branches and you get pointed to a computer; there’s not a great deal of help. So, I think borrowers want someone to hold their hand through the whole process from start to finish,” he told The Adviser.
“I think the [broker share] numbers are undeniable. I’d really like to see what the next [Comparator] report says; I think it might be more yet again. I think that is something that the government and the royal commission can’t ignore. I think customers are voting with their feet in terms of which stream they want to go, and it’s just undeniable that they are supporting the broker channel.”
He concluded: “We’re extremely conscious of always doing the right thing by the customer, putting the customer’s needs first. All that stuff that is academic in your business as a good broker.
“I think that given the 60 per cent share of flows, it would be very hard pressed for the government and the royal commission to make any real catastrophic changes that would blow the industry up.”
[Related: CBA appoints new head of third party]