Despite brokers reportedly writing more commercial loans now than ever, the market share in the commercial property loan share remained markedly unsubstantial at 38% of new loans vs 70% of new residential lending.
With residential easing in a high interest rate environment, more home loan mortgage brokers are venturing into some of the simpler products available in commercial lending.
Several brokerages urge their home loan brokers to also do commercial – not just to diversify their income streams but also to retain staff who get bored with the churn of residential applications.
Read more: Commercial lending for all seasons
“The reason why we’ve just hired another group of home loan brokers is to actually teach them commercial as fast as possible,” said Bill Constantinidis, chief executive of The Lending Association. “What better way to keep them interested than showing them this other world… there’s no doubt commercial is specialised, but is it really beyond? Beyond everyone’s mindset to learn? I don’t think so.”
Not everyone agrees with this, though. Some believe that to be truly proficient at something, one has to specialise in just one discipline.
At La Trobe Financial, brokers are not pushed to jump through any additional hoops to start writing commercial loans.
Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, believes it crucial to provide brokers largely unrestricted access for future growth and professionalisation.
“Generally, I think it’s a case of a rising tide lifts all boats,” Bannister said.
Bannister also believes residential lending is at risk of becoming even more automated than it already is, to the point where banks could decide that the broker’s role isn’t as crucial to the mix as it is currently.
“[Residential broking] won’t ever go away,” Bannister said. “There will always be a need for specialist solutions, but a lot of ‘vanilla’ lending will be automated, which could present a risk for brokers. Whereas commercial is, in my view, going to remain a much more manual process for longer.”
Many commercial brokers are still unclear about what the arrival of AI will mean for their area.
“We can either embrace it and run with it, or we can put our head in the sand and try to pretend like we’re all old-school,” said Matthew Johnson, managing director at Simplicity Loans & Advisory.
Technology’s impact on residential lending has been estimated by some to have reached the degree that banks are already automating up to 70% of lending decisions.
“A large chunk of it will go that way in commercial,” Johnson said. “Not all of it; you’re still going to need an expert who can sit there and give advice to clients where there’s some nuances to it… but there’s a whole chunk of it that can absolutely be assisted with technology to make it faster and quicker to ultimately be a better customer experience.”
This sentiment is shared by other brokers.
“[There are] a lot more nuances and complexities… but there’s definitely room for it,” said Billy Moskovich, director at commercial property specialist Stamford Capital. “Forms are fiddly to deal with, and adding tech to that would add value.”
Regardless of any fears around how AI will impact jobs, several brokers feel more automation would be welcome to address some of the more painful parts of the commercial lending process.
“The amount of different solicitor firms we deal with that come out with different requirements for the same type of transaction – [AI] would definitely help with consistency as well as streamline that process,” said Joanne Hu, general manager of distribution at The Lending Association.
But for the moment, the spectre of AI taking over the world of lending is held in check by a cost-benefit analysis.
“You can say, ‘well, it’s going to cost you x’, but how much money is it actually going to generate? I think that’s where there’s a lag,” said Jeremy Enconniere, head of commercial partnerships at La Trobe Financial.
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