According to a 25-year veteran of the banking and finance industry, “the top three losers” from the royal commission were single parent families, lower income earners and borrowers over 45 years of age.
“The unintended outcome of the lending environment created by both the royal commission and APRA is that those who are most negatively affected are the very people you would like to most help in the community,” said Roger Ward, director of Champion Mortgage Brokers.
Ward says the combination of higher assessment rates, higher assessment of living costs, and the finance industry using a retirement age of 70, have pushed already marginalised groups even further from achieving their home ownership goals.
“It hasn’t just locked a few borrowers out. There are tens of thousands of people around the country that have just been moved out of home ownership,” he said.
Further, Ward observes that while in years past regulators handled compliance on a macro level, they’re now moving into a micro level.
“This is a very different thing, because the regulators are not in touch with the risk profile of the contemporary economic environment,” he said, naming the unreasonable assessment rate benchmark which has raised the income threshold for lending as an example.
According to Ward, the rapidly complexifying market only further contributes to the need for mortgage brokers.
He explained, “Most borrowers have no idea about bank lending policy. They’re being declined, with the only reason being that they’re sitting in the wrong bank. They could be good borrowers, good risks.”
“Brokers are the only mechanism in the market that understands, on a micro level, bank lending policy. We better understand the client and can place them before lenders that are going to be sympathetic to their borrower plight.”
While Ward believes that the role of brokers is crucial across the board, he also highlighted that after two decades of the banks pulling back from regional Australia, the need for mortgage brokers in certain areas has become “desperate.”
He added, “There are towns that have no banking representation whatsoever. Mortgage brokers are the only mechanisms able to deliver lending services to those communities.”
“Brokers truly need to advocate for consumers,” Ward concluded.