The challenges raised by the royal commission and lending policy changes have taught brokers to adapt and innovate
IS EVEN TIGHTER LENDING ON THE HORIZON?
Residential mortgage lending will likely further tighten as a result of the royal commission, according to Moody’s Investors Services. The royal commission’s interim report has scrutinised lenders’ lack of verification of borrowers’ living expenses, and overreliance on the HEM benchmark. The final report is still to come, but with those issues looming over the banks it’s unlikely they’ll ease up on their rigid underwriting standards any time soon. The tightening of credit has already manifested a downside. According to Moody’s, it has contributed to the decline of house prices in Sydney and Melbourne.
“During what should be noted as the most turbulent and uncertain year for our industry in its entire existence, one learning that came out of it and will always ring true is: whoever the customer chooses will eventually win.
“The broker market share has grown more than at any other time in our history. More people came to us for help with one of the most important decisions of their lives. The royal commission and regulatory changes have made the whole loan process more complicated for the general public. We’re not talking about privileged, private bank-assisted barristers; we’re talking about moms and dads who want to own their home. Change creates opportunities for us all.”
Personal mortgage adviser
“We have learned to be resilient and to accept that many of the changes to how we work are outside of our control. Clients are quite nervous now and often they feel judged by the extra layer of scrutiny they are subjected to. We have become educators who are helping them understand how their financial behaviour impacts their borrowing capacity. We have to accept that it now takes a medium-term approach to get customers to become ‘credit ready’.
“We are also returning to first principles: staying close to our customers and remaining positive, which I believe are key drivers for continued growth amidst a tough regulatory environment and slowing property market.”
All R Loans
“The past year has reinforced the belief I’ve long held: if you continue to do what you have been doing, you will continue to get the results you have been getting. My organisation has grown and matured over the years, but we will adapt to newer ways of doing business and infuse more technology into our service model.
“The lending industry is being transformed with tighter regulation and more funding choices. Our customer demographic is changing as younger generations become more tech-savvy and more inclined to self-service solutions. Our customers seek transparency in lending and quicker decisions on their loans. In order to grow, our processes and thinking need to adapt.”