The Australian Prudential Regulation Authority’s push to slow down the level of lending to property investors could likely have an unintended consequence.
The head of major Australian mortgage broking franchise believes APRA’s push has resulted in an increasingly complex lending market that is likely to cause more people to seek out the service of a broker.
“We have seen a number of banks make some sweeping changes to their policy and pricing in a bid to curb their level of investment lending growth,” Mortgage Choice Chief executive officer John Flavell said.
“These changes, which include modifications to servicing criteria, loan to value ratio restrictions and interest rate increases across select home loan products, have made the home loan market more confusing and complex,” he said.
“As a result, buyers increasingly need expert advice to help them navigate the home loan maze and find the right product for their needs – which is where mortgage brokers come in.”
Flavell isn't alone in his opinion, Multifocus Properties & Finance chief executive officer Phillipe Brach believes people, especially investors would be "crazy" to try and get a mortgage without a broker.
"To go to a lender on your own at the moment would be crazy, without the scope that a broker has there's no way you could know the different requirements the banks have," Brach said.
"It used to be that you could to the big four banks and they would be pretty similar, but now if you're investor the requirements are different from bank to bank and if you go in by yourself you don't stand a chance because nobody at the bank is going to guide you through."
Flavell also played down comments made by Westpac CEO Brian Hartzer earlier this week claiming that the broking industry should be prepared to be put under increased scrutiny from regulators like the financial advice sector had been.
"The reality is that the mortgage broking industry has gone through significant change over the years with the introduction of National Consumer Credit Protection legislation. All brokers have a very clear obligation to ensure that customers can service their debt without substantial hardship,” Flavell said.
“Today, brokers are well educated, mortgage professionals who are well placed to deliver customers with sound home loan advice, guidance and importantly choice.”
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