The big four bank is anticipating subdued settlement growth in the coming year, weighed down by weaker volumes via the broker channel in response to the bank’s assessment policy.
Global consultancy firm Deloitte has published its annual Australian Mortgage report, which seeks to provide insight into industry expectations for the year ahead.
Deloitte asked 10 industry executives for their take on emerging issues in the home loan space, including their forecasts for mortgage growth.
John Campbell, ANZ’s general manager of home loans, was among the surveyed respondents and was asked to outline the bank’s forecasts for mortgage growth in 2020.
According to Mr Campbell, the bank is forecasting 2-3 per cent settlement growth in 2020, mostly as a result of the continued uncertainty surrounding responsible lending obligations.
Echoing remarks from ANZ CEO Shayne Elliott, Mr Campbell acknowledged that the bank’s interpretations of compliance with NCCP have increased turnaround times for mortgage applications.
“As we work our way through what it means to be a responsible lender, there are different interpretations of the regulations and rules,” he said.
“Lenders do tend to interpret it differently.
“The interpretation plays out predominantly in policy setting, which then impacts assessment and operations, ultimately influencing certainty and confidence for customers.”
The ANZ GM said the bank’s turnaround times have particularly affected volumes via the broker channel, where he said service propositions play a significant role in determining a customer’s product choice.
“ANZ has for a long time been the bank with the largest broker-originated flow, relying on the broker channel the most,” he said.
“If it’s harder for a customer to know whether they have a deal, or how long it will take to get it through the process, and where they have a choice – which clearly the customers originated through brokers and aggregators do – they will choose to go to where there is certainty and confidence.”
This comes as recent mortgage market developments highlight the link between processing times and broker preferences.
The Commonwealth Bank of Australia and Macquarie Bank recently attributed above-system home lending growth in their financial results to fast turnaround times, while Suncorp Bank blamed slow processing times for a contraction in its mortgage book.
These trends are also reflected in research from Momentum Intelligence, which highlights the recent shift in broker preferences in response to the service propositions offered by lenders.
Meanwhile, NAB’s general manager of home lending, Paul Riley, who also participated in the Deloitte survey, added that the broker channel would continue to play a crucial role in shaping home-lending flows.
“Broker flow [continues] to increase at a larger rate and represents six in 10 applications,” he said.
“Comparing that penetration with other markets, that growth will continue.
“The flow to brokers continues to be a consumer preference, which doesn’t appear to be disappearing for a number of understandable reasons.”
According to the Australian Finance Group’s latest mortgage and competition index – which involves data collected from the aggregator’s network of 3,000 brokers – both ANZ and NAB recovered ground in the broker space after several quarters of decline.
ANZ increased its share of broker lodgements over the December quarter of 2019, from 9.1 per cent to 10.7 per cent, after recording declines in both the March and June quarters.
NAB’s share of the third-party channel increased from 7.9 per cent in the September quarter to 9.6 per cent.