Future broker: The outlook for lending

What will the mortgage broking industry look like as we approach 2020? Some of the industry's top minds sound off on the future for lending competition.

Competition took a nosedive during the GFC and experts agree it will take more than time to heal the situation.

“How’s your crystal ball? What’s going to happen in Europe? What’s going to happen to the capital markets?” says Fujitsu's Martin North. ”If the non-banks are able to get reasonable levels of funding at reasonable price points then they can come back into the marketplace. But at the moment where we are is that the capital markets are so disrupted because what’s happening in Europe it’s very hard for non-banks to raise adequate capital which is why non-banks at the moment are competing at the margin in nonconforming loans.

“So in the current environment I think it’s very tough to see how you can expect to see non-banks to write a large share of the market. I think it’s more likely that we’ll some of the smaller players the credit unions, and some of the building societies who have a little bit more direct access to deposits probably playing a more significant role, but I also think we’ll see the big guys continue to compete and will still be eating the lion’s share of the business.”

According to MFAA chief executive Phil Naylor, there is no going back.

“I don’t think we’ll see non-banks get back to where they were pre-GFC. I think the world has just changed and moved on since then.”

The MFAA is lobbying to get the government to look at Canada, which has a strong non-bank sector because of the government-underwritten securitisation program.

“There is another banking inquiry on at the moment where we’re making submissions to that along those lines and it’s something that we just think it works,” says Naylor.

“It’s been demonstrated to work – why wouldn’t a government look at something that is successful and in fact produces returns for the government?”