Thursday, February 22, 2018
Knowledge Portal Articles The Changing Face of Property Finance

The Changing Face of Property Finance

Property appears to be facing a mixed bag; some up, some sideways, some down. But mortgage brokers seem to be facing two distinct trends.

First, it is clear that brokers will have to become even more professional. The removal of volume-based commissions is the next step as the industry works to prove to customers that brokers have their interests at heart – rather than their own pocket.

And lenders are going to expect more from the brokers who submit loans to them. CBA recently announced that it would only work with brokers with two-years’ experience or a Diploma in mortgage lending (rather than the minimum entry-level Cert. IV)

But lenders remain committed to brokers; in removing its volume based commission bonus, ANZ increased upfront commissions to brokers.

The second major trend will see the renaissance of shadow lenders in 2018 – and many of these lenders have the muscle to compete with Australia’s major banks.

Recently, Wall St heavyweights Blackstone and KKR took out major investments in non-confirming lenders La Trobe and Pepper.

Australian property has not seen this much competition in finance since the days of Wizard Home Loans and Rams were key market drivers.

The Economist calculates that Blackstone has US$92bn of funds that it is looking to invest around the world. US investment behemoth KKR has $A49bn in assets – something that many Australian lenders would envy

Just a tiny proportion of these global financial heavyweights’ funds could be a major stimulus to the Australian lending environment, just as our domestic banks are being held back by the Australian Prudential Regulation Authority (APRA).

Given that these lenders primarily go through brokers, it is highly likely that good, professional brokers will continue to succeed.

And, with ANZ predicting four per cent growth in 2019, the future remains bright for those brokers who can run their business in very different environments.

 


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