Aggregator to banks: Time to share the wealth

by Mackenzie McCarty03 May 2012

One of the market's largest aggregators has said that major bank rate cuts should be 'meaningful' or risk a continued market stagnation.

Australian Finance Group released mortgage processing figures for April yesterday which it said exposed the present vulnerability of the home loan market.

While acknowledging April is traditionally a quiter month for borrowers as they enjoyed Easter and school holiday breaks, AFG said April contrasted with the previous two much stronger months.

AFG saw loans processed decrease by 22.4% from $2.9bn in March to $2.2bn in April, which put its volumes 7% higher than the figures recorded in April last year.

However, AFG said in context demand was subdued, and that the high proportion of fixed rates - at 21% of all loans, down from 25.4% a month earlier - was a further sign of consumer nervousness.

AFG's general manager of sales and operations Mark Hewitt said the group had signalled the fragility of the market for some months, and April saw even more borrowers adopting a 'wait and see' position.

"There has been so much negative commentary that a confidence boosting RBA rate cut had become urgently needed," Hewitt said.

He urged lenders to pass on as much of the rate cut to consumers as possible, to stimulate demand.

"Lenders must pass on a meaningful proportion of this cut if they wish to see demand for home loans improve significantly," he said.

AFG's processing volumes showed investor activity soared to 44.4% of all new loans in that state, up from an already high 40.1% in the month before.

 

COMMENTS

  • by Barney 3/05/2012 10:30:02 AM

    What about taking some of their excess margin and giving us our 0.25% trail back!!
    Good brokers could re invest in their business with better remunerations and pay for better training and systems as well as growing their business with more staff and undertaking new marketing initiatives. Pretty hard to do that these days when some lenders are paying zero in year 1 (CBA) and others hover around 0.15% still!
    "Share the Wealth" - I agree. They would get more volume if they were less frugal.

  • by Barney 3/05/2012 10:41:41 AM

    With the excess margin the banks are earning and their multi billion dollar profits - how about they give brokers back their trail commissions at 0.25%. We were compressed by the GFC yet there has been no movement in getting our margins back!
    WHy arent aggregators getting together (or the completely useless MFAA) and lobbying harder for the broking industry?
    With a greater share of income you will attract more highly qualified brokers. Brokers will also be able to re invest more into their businesses in systems and processes, compliance, marketing and staff. Which - in turn - will create greater volumes. Its much harder to expand a business when commissions are still 40% down on the pre GFC amounts.
    Short term thinking on the Banks behalf! All of these massive client pricing discounts just causes the Banks to fight over the same (few) clients. Offer a smaller discounts - pay the brokers more - and watch the industry grow and the volumes will follow.
    "Share the Wealth" - I agree - give us our trails back.

  • by Ripped off broker 3/05/2012 11:00:21 AM

    I'm with you Barney.