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Lenders' policy changes put pressure on broker business

by Staff Reporter10 minute read
The Adviser

Changing lending policies have put the onus on brokers to keep their clients in the know.

THE continued tightening of lending criteria over recent months is taking its toll on brokers and their businesses - although not everyone is suffering.

According to a recent Mortgage Business straw poll, lower maximum LVRs have hit the vast majority of brokers’ loan volumes, with 89 per cent registering some impact.

Just 19 per cent of the 498 respondents said their business had not been hurt, while 2 per cent could not say.

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Mark Rogan of Financial Decisions in Sydney says maximum LVR reductions and policy changes have placed substantial pressure on the range of options he can offer clients.

But while he has noticed a slight drop off in business in recent weeks, Mr Rogan does not think tighter lending standards are the reason.

“I had a couple of first home buyers with pre-approvals who I had to knock back after the genuine savings requirements came in,” he says.

“But most of my clients, including first home buyers, seem to have reasonable deposits. Maybe I’m lucky.”

Like Mr Rogan, James Nowlan of Brentnall Finance says he hasn’t lost many deals as a result of changes to lending policies. He attributes this to keeping his clients informed.

“It’s now a matter of communicating new criteria to clients and then positioning them appropriately. If they need 5 per cent genuine savings, then you help them do it,” he says. “Communication is key. Being brokers, we should be aware that things are tightening up, so it’s important to get this message across.”

While lending policies have become a moveable feast in recent weeks, brokers are optimistic that there will not be any further substantial changes.

“Maybe they’ll raise the benchmark stress tests further but I think they’ve probably covered off on policy tightening for now. I can’t really see them pulling back any further,” Mr Rogan says.

Mr Nowlan agrees. “It won’t get any easier... But I don’t expect LVRs to fall any further.”

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