Broker support for second tier needed: Foley
By
Ben Abbott
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4/08/2010 5:59:00 AM
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4
comments
National Mortgage Brokers' managing director Gerald Foley has called on brokers to support non-bank and second-tier lenders - or risk having competition in the market further diluted.
Speaking with Australian Broker, Foley said while customers should be placed in the best loan available on their lender panel, this "may not automatically be a product from a major bank".
"I think brokers - and it may be driven a little bit by the customers as well - have a preconceived idea that the big banks are really the only option available, and I just think they need to broaden their horizons a little bit, for the longer term benefit of the marketplace," he said.
Recently released NMB figures for the financial year 2010 show the spread of loan sales is "still uncomfortably slanted towards the four majors", particularly when including subsidiaries.
The group's results show the major banks (not including subsidiaries) snapped up 72% of NMB residential loans written, with CBA taking a 26.6% slice and Westpac second at 20.7%.
Foley warned that second tier lenders - such as ING Direct, AMP, and Suncorp, with their own diversified funding - should be supported, or they may reconsider their role in the broker market.
"As long as brokers support a broader range of brands and product, those brands and products will remain in the market," he said. "If brokers don't support those brands then those businesses will make a decision to go another way to try and obtain the new lending they need to fund," he said.
Foley said during the financial crisis, the market saw a flight to "perceived quality", in the form of the major banks. However, combined with the consolidation in the sector - particularly the purchases of Bankwest and St George - the control of the majority of mortgage lending had fallen to major banks. This also applied to mortgage managers, he said, which source funding from these banks.
"You'd hope that going forward the majors maintain both brands [Bankwest and St George] in the broker space, and understand the value to brokers and clients of having a range of product and brand."
Related stories:
Non-banks gaining market share
Latest Comments
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comment(s)
Brokerland on
04 Aug 2010 10:39 AM
Interesting that a couple of long serving BDM''s and a state manager from ING have resigned recently in Qld. Could this be a sign that ING may be considering their role in the broker market.
Melb Broker on
04 Aug 2010 10:56 AM
If they want the business then they need to work with brokers by giving better service, work on their credit decisions / policy and come up with products that can be sold.
Country Broker on
04 Aug 2010 11:00 AM
Good On Gerald . We the broker community now need to do loans that are "not Unsuitable " for a clients needs , that can mean the second teir lenders. We need not only to consider these lenders but the non bank sector as well . They all offer vaible alternatives.
Really brokers are lazy , we got into the habit of supporting the big 4 during the GFC, even though two in particular bsically tried to cut commissions and trailers to get us out of the market. That did not happen we are still here and going stronger.
Please listen to Gerald and other STOP using the two worst offenders ( you know the two who basically raped us ) and start thinking of your future as an industry . STOP BEING HABITAUL and use alterntives when appropriate.
Peter on
04 Aug 2010 11:54 AM
we currently use second teir lenders, and more brokers should. Yes some of their customer service needs improving, possibily due to staff numbers. We need to give them more credit....