Brokers blurring home lending market
Commenting on the rise of brokers in the home lending market, the managing director of Aussie Home Loans, Mr John Symond, said the rise of mortgage brokers had proven another thorn for the non-bank mortgage origination industry
Non-bank lenders are already facing problems of profitability and scale. Mr Symond told a recent seminar the advent of brokers had blurred the industry saying that broker “fees and commissions can be financial suicide”.
With little difference between interest rates of non-bank lenders and the major banks, competition is shifting away from price. An example of this the commonplace practice of lenders discussing loans with the applicant in their home.
Whilst the Australian approach is to handle all components of a loan and its administration, the industry would have to find new ways of operating. In comparison Mr Symonds says that in the US there were separate businesses to handle this.
Aussie is profitable with a loan book of $9 billion – yet it faces many challenges and cannot take its position for granted.
New innovations are vital and Mr Symonds said it might also seek to develop relationships with its customers beyond the home loan.
Although the banks have been poor at cross selling, he conceded that Aussie did not have the resources of the majors and had led to withdrawal of certain projects due to lack of capital.
AFR Online, 15/10/01 .