Find below Genworth’s latest mortgage industry survey which shows very depressed lenders combined with a very enthusiastic brokers, among other discussion worthy factoids:
Lending slows in 2012, with most lenders expecting continued reductions in credit growth ahead
• The majority of lenders have experienced slow credit growth over the past year.
• Queensland lenders have struggled over the past year, largely due to higher than average unemployment rates and tightened credit standards.
• Low property valuations have impacted the level of demand from potential investors and refinancers.
• Lenders expect consumers to continue deleveraging and saving in 2013, primarily because of employment insecurity.
• Lenders are expecting a renewed focus on optimising IT/processes and cost reduction initiatives.
• Lenders will rely on maximising their channel strategy, improving customer service and new approaches to segmentation in order to reduce the impacts of the low credit growth environment.
Brokers are optimistic about 2013
• Brokers are more optimistic than lenders about credit growth in 2013.
• There was a general consensus among brokers that the drop in lending is mostly due to a lack of demand from FHBs.
• Many brokers agreed that lenders needed to clarify their credit scoring policies.
• Brokers need competition between lenders in order to grow their business in a low credit growth environment.
Online channels become increasingly important
• The majority of lenders plan to make investments in the online channel over the next year.
• Brokers have experienced an increased number of leads from online channels.
• Lenders are most likely to agree that the optimal online application experience is online followed by further contact options.
• Brokers are more likely than lenders to believe the online channel will cannibalise the branch, mobile lender and broker channels.
Social media use grows as a communication and branding tool
• Lenders are using social media to stay relevant to customers, though it was acknowledged that this is currently not producing revenue benefits.
• Brokers are using social media to build brand awareness and credibility amongst potential customers. Lenders are less likely than brokers to believe affordability will improve for FHBs
• Almost all (12 out of 14) surveyed lenders believe affordability for FHBs will either stay the same or worsen over the next 12 months.
• Lenders and brokers agree that changed government incentives are unlikely to stimulate demand from FHBs.
• Brokers believe that FHBs have high expectations, and want more than they can afford.
• Lenders and brokers agree that the FHB perception of needing more than 20% of the property value as a deposit often stems from their parents mentality, as highlighted in the September 2012 Genworth Streets Ahead report.
Data analytics fuels innovation
• Lenders and brokers were most likely to agree that FHBs would benefit more than other segments from product innovation.
• Brokers were more likely than lenders to agree that selfemployed borrowers and refinancers would benefit from product innovation.
• The majority of lenders agreed that innovation in the mortgage market will be delivered through data analytics and customer insights
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
