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The uncertainty of SMSF lending following David Murray’s recommendation to ban it in the Financial System Inquiry has seen a reduction in broker interest in this space, according to MFAA chief executive Siobhan Hayden.
Ms Hayden said the industry is concerned about Mr Murray's recommendation and is awaiting a response from the market.
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“I think indicatively we’ve seen a reduction in overall enthusiasm for that type of lending and training in that space,” she said.
“There’s still [support] in the industry in relation to the use of limited recourse borrowing arrangements, but I think there’s concern it might be removed.”
Ms Hayden said the MFAA will continue to support SMSF lending through the training program it provides, but said the association had noted a decline in registrations for this training.
According to a recent survey by The Adviser, 57 per cent of respondents think less people will purchase property via their SMSF in light of the new lending landscape.
FBAA chief executive Peter White said the future of SMSF lending was still unclear, and “a slight contraction” in the market is the most likely outcome.
However, Mr White said brokers who specialise in SMSF lending should not be scared off by the prediction that the sector will shrink.
“If you’ve got a strong SMSF space, it doesn’t mean that space is wrong or that space is going to collapse,” he told The Adviser.
“Anyone involved in lending should have diversification in what they’re doing. I think being mono-stream has a potential risk to it, so I’d recommend that all brokers having some sort of diversification on top of their core business.”
Mr White said the future of SMSF lending was still unclear, but that “a slight contraction” in the market is the most likely outcome.
[Related: Spruikers not brokers 'creating the problem' with SMSFs]
