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Aggregation heads have been quick to reassure brokers that the Australian market is unlikely to see the departure of a bank from the third-party channel in the near future.
Recent months have seen the exit of Macquarie Bank and a number of non-banks and credit unions as access to competitively priced funds has become more challenging.
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Broker concern that a significant lender may exit was reflected in a recent Mortgage Business straw poll.
Of the 740 plus poll respondents only 29 per cent said there was no chance that a bank would drop the broker channel within the coming months.
34 per cent said a bank would definitely withdraw from the channel while 37 per cent said it was a possibility.
Mark Hewitt, AFG’s general manager of sales and operations, said as far as he was aware such fears were unfounded – though he wasn’t surprised given the current market conditions.
“We’ve had commission cuts starting to kick in and a lot of second and third tier lenders falling away; competition is decreasing.
“With only four banks remaining there is concern about the role of brokers,” Mr Hewitt said.
Alex Moulieris, head of broker platforms with Challenger Mortgage Management, said that the chaotic financial environment had taken its toll on broker confidence.
“We’re in the midst of a significant financial crisis right now and that’s bound to influence sentiment,” Mr Moulieris said.
However Mr Moulieris believes that decisive government action, the sharp reduction to the cash rate and the stability of the Australian banking system bode well for the continued support of the third-party channel.
“The recent guarantees given by the government will have eased funding concerns for the banks and bolstered the banking system as a whole,” he said.
“All the majors’ commission restructurings also suggest that they will be around for at least the foreseeable future.”
MFAA CEO Phil Naylor pointed to the strength of the broker among borrowers as an indication of its significance with lenders as a key distribution channel.
“The thing to remember is [that] all the consumer research we’ve ever conducted, as well as other research out there, shows customer prefer dealing with brokers,” he said.
Published: 17-10-08
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