Login
ISCOVER
A recent Four Corners report should serve as a stark warning to lenders and aggregators as to the media coverage they’re likely to face as borrowers increasingly struggle with their debt levels.
The media’s message is coming through loud and clear: borrowers are not to blame for being unable to service their debts. That blame is instead being laid squarely at the feet of those who are providing and distributing funds – and that includes lenders and brokers.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
While this comes as no surprise, it’s worth giving some thought to how the media blame game may play out in the coming months should affordability levels continue to slide.
Consider this: the broker and non-bank market has never been tested in a cycle of rising repossessions. Back in the nineties – when the recession and resulting spiraling rates cost some borrowers their homes – almost all loans were bank originated.
Today, anywhere up to 45 per cent of loans are written by brokers while non-bank lenders account for around 15 per cent of the mortgage lending market.
The media has been itching to pounce on brokers and non-bank lenders for some time, particularly the low doc market, but up to now they’ve struggled for a valid an excuse. The current conditions are now handing them one.
With the dramatic shift in how mortgages are written and distributed you can be certain of continued and intense media focus on this sector should increasing numbers of borrowers be kicked out of their homes.
The media bashing meted out to the non-bank sector before Christmas as the US sub-prime market collapsed and global funding costs soared is an indication of what may lie ahead.
Now is the time for mortgage businesses to think carefully about how they market their services and communicate with their customers to help safeguard themselves against a future media backlash.
A strong brand takes years to build but can be destroyed overnight. And while Australian repossessions may never become a problem, it is prudent to be prepared as the US slides towards recession and global uncertainty increases by the day.
We hope and believe that a robust Australian economy and healthy Asian demand for our resources will see the country through these tighter times, but there are no guarantees. Hope for the best but prepare for the worst would be a wise policy for mortgage businesses to adopt when it comes to their communication strategies for the coming year.
Alex Whitlock
