While the mortgage broking industry has weathered a steady stream of challenges, from the Global Financial Crisis to APRA’s tightening regulation around interest only and investor loans to the royal commission, the head of an aggregator has highlighted the unique obstacle presented by COVID-19 – and the support needed to continue doing best by borrowers.
“The COVID-19 environment is going to have a very significant impact on a lot of new customers in terms of their employment,” explained Connective executive director Mark Haron.
“While there’s been a bit of a reprieve in that people have access to government funding and they’re able to pause their repayments, we are moving towards the end of the six-month repayment pause period still having a lot of people not in a financial position to make those repayments. There will be jobs people had coming into this COVID-19 pandemic that just won’t be there going forward.
“That’s going to put a lot more stress on the system for a lot longer until we see more significant economic uptick, which we won’t really see until the last quarter of the 2021 financial year, April to June next year.”
“Brokers need to work with their clients and the banks to adjust to that massive challenge.”
Given the grave figures around COVID-19 job loss and the long-term implications they carry, Haron expects to see further support offered to home loan customers, whether through an extension of the loan repayment pause or the introduction of other measures.
“We’re seeing a really responsible approach from the banks to date, so if there are still going to be 700,000 to one million people that don’t have income in September and October, the banks are not going to be in a hurry to do foreclosures on any of those people,” he explained.
“Certainly the banks won’t want to be putting a lot of houses on the market because it would have a disastrous effect on property values as well, which would not be to anyone’s benefit – especially the banks holding onto those mortgages.”
However, the Connective director stressed that the ongoing support for the economy can’t rest solely on the banks, but needs to extend to government as well.
“The key comes from the government supporting the banks’ measures and supporting brokers in regards to any after-complaints that might flow from the fact that banks are doing the right thing by their customer and allowing them to put a repayment pause,” he said.
“Should a customer then turn around and complain to an ombudsman that it has caused them significant financial cost… well, the alternative was that the bank didn’t give that option and moved the customer into foreclosure sooner which really wouldn’t have been humane.
“We’re just hoping for a good, balanced approach not only from banks and government, but also from the regulators,” Haron concluded.