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MFAA reiterates call for discharge standardisation

by Annie Kane12 minute read

Lenders should either move quickly to discharge loans or be mandated to do so, the CEO of the broker association has said.

On Tuesday, 12 September, members of the mortgage industry told delegates of the AFR Property Summit in Sydney that there are a range of challenges and opportunities facing competition in the home loan market, as well as areas of friction that could be alleviated to create a better mortgage experience.

Among the members of the industry who spoke was chief executive officer of the Mortgage & Finance Association of Australia (MFAA), Anja Pannek, who noted that while mortgage competition has subsided from the frenetic levels seen over the past two years (particularly highlighting the churn caused by cashback and interest rate wars), more could be done to improve the refinancing market.

Speaking to The Adviser following the event, Ms Pannek elaborated: “We’ve recently held roundtables right across the country and feedback that we continue to get from our members is that there is anti-competitive behaviour from the lenders when it comes to discharges.


“While there are record levels of refinancing, customers are facing long delays from the lenders. It’s important in the current environment that customers are able to move and have a seamless discharge process so they can save money, but it’s much harder than it needs to be. This has been a problem for brokers for the past year and is still an issue today.

“Brokers do all the work, they find the discharge forms and submit the forms and then there’s long delays while the lender looks to undertake retention activity. We’re hearing stories from broker members of lenders looking to retain a client after they’ve already left, which is a poor experience for both the customer and the broker.”

Ms Pannek reiterated that the association believed there should be a standardised discharge form and a mandated timeframe on how long discharges take, as recommended by the ACCC’s Home Loan Price Inquiry report in 2020.

“If this isn’t done by lenders themselves, then the ACCC could step into this conversation and look to get some legislation in place.”

The MFAA CEO also noted that brokers were frustrated by lenders failing to put their “best foot forward” on pricing, only meeting a rate or offering their best offer after the discharge form had been lodged.

“This not only causes delays but is also not a good customer experience. And it’s not what’s best for the consumer.”

Ms Pannek told the AFR Property Summit that she believed the broker channel market share would only continue to grow. While the broker channel currently writes just under 70 per cent of residential mortgages, the MFAA CEO suggested that the higher cost of mortgages and impact on cash flow would result in more borrowers turning to brokers for credit advice.

She highlighted that a recent sentiment survey revealed the “great work” that brokers are doing in helping borrowers navigate the current mortgage market and get “refinance fit” amid rapidly rising interest rates, with the majority talking to mortgage customers who had never used the channel before. Moreover, with some lenders reducing their serviceability buffers for certain borrowers, brokers were well placed to help borrowers determine which lender may have a more favourable servicing assessment.

Speaking to The Adviser, Ms Pannek added: “It’s so critical that borrowers are in a position to be able to refinance either now or in the future. With a broker’s help they can do that – and, we know that there are overall low levels of clients seeking hardship, which we attribute to the great work that mortgage brokers are doing in helping put their clients in the best possible position.

The MFAA concluded by saying she believed the spring season would see a return of activity for new mortgages, too.

“Based on conversations with members, a lot of people are getting ready to re-enter the market ... there is a positive tone in sentiment so I’m super keen to see where that leads in terms of mortgage broker market share over the medium term.

“If you look at the UK, they are at around 80 per cent market share, and while we have a slightly different mortgage market, the demographic is very similar. So I think that’s an aspiration that is quite achievable in the medium to long term.”

[Related: The Word: What have been the biggest challenges you’ve found when refinancing?]

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