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RAMS' decision to leave the broker channel at the end of next month has left brokers shocked but ultimately unfazed.
Though initially surprised by the non-bank lender’s sudden departure, many brokers believe RAMS' exit will have little impact on their bottom line.
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Firstpoint NB director Troy Phillips told The Adviser that once the dust settled, the RAMS pull-out would open up new opportunities for the broker market.
“It is about time the smart brokers woke up and started looking at new business models,” Mr Phillips said.
“RAMS exiting will be followed by bigger “shocks” and change in 2010, from all this will come some of the greatest opportunities this industry has ever seen.”
Yesterday, the lender told its brokers that it would leave the industry on 26 February, citing the recent slump in broker activity as the main reason behind the departure.
Moreover, RAMS also said any full doc loans generated by the broker channel would have its lLVR reduced from 95 per cent to 85 per cent.
This is not the first time the lender has pared back on its broker policy and pricing.
In March 2009, RAMS withdrew its 100 per cent home loan from the broker channel due to “unsustainable volumes”.
The non-bank lender changed its policy so that any broker clients would be required to contribute a genuine savings deposit of 3 per cent for any LVR greater than 90 per cent.
In August the lender applied more pressure to the brakes when it decided to cease its dealings with 16 “low volume brokerages” in a bid to improve its servicing levels.
Tiffen & Co and The Mortgage Detective director Allison Whittle said it was evident that RAMS had been pulling away from the broker market for some time, so their departure announcement yesterday was not a great surprise.
“While I am sure RAMS' decision to leave the market for good did shock some brokers, it came as little surprise to me.
“We could all see that they had been planning this for a while,” she told The Adviser.
According to Ms Whittle however, Westpac’s announcement earlier this week that it would reduce its LVRs for new customers from 97 per cent to 87 per cent would have a greater impact on broker business.
“That announcement was a real shock. From now on, new Westpac customers will only be able to get a LVR of 87 per cent on their loan, while pre-existing customers will still be able to access a 97 per cent LVR including LMI,” she said.
“I believe Westpac’s decision to pare back on its LVRs suggests they might be suffering from ongoing funding constraints.”
