MORTGAGE origination is an industry few people would have heard about until recent times but, after just 12 years, the burgeoning industry is rapidly changing the face of housing finance.
MORTGAGE origination is an industry few people would have heard about until recent times but, after just 12 years, the burgeoning industry is rapidly changing the face of housing finance.
And, in what is a rare occurrence, Western Australia is leading the nation in the development of this industry, which was last year ranked in Australia’s top five growth industries.
Nationally, more than 25 per
cent of borrowers use mortgage originators to arrange a loan, while in WA the figure is closer to 50 per cent.
In coming years the national figure is predicted to climb to 40 per cent, however some sources indicate the industry has the potential to follow in the footsteps of the US, where between 70 and 80 per cent of borrowers use mortgage originators.
The reasons for the attraction are many, but two of the biggest are the level of service and range of products a mortgage originator can offer, according to The Loans Café director Anne-Marie Syme.
“Most people who are applying for a home loan are also working and they do not have time to go bunny-hopping up St George’s Terrace to see what lending packages the different banks have on offer,” Mrs Syme said.
“Many mortgage originators are available twenty-four-seven and we can offer customers over 700 product combinations from 28 financial institutions.
“And we are not going to try and cross sell them frills or other financial services that they don’t need or want.”
Mortgage originators assess the needs of each client and research loan packages from lenders and then present the most suitable options to the customer.
Once the customer has selected which organisation they will use, the mortgage originator will put together the customer’s loan application for them.
Mrs Syme said mortgage originators also could offer their clients a degree of certainty as most would not submit a loan application to a bank if they had even the slightest suspicion it would be declined.
“And the service is completely free for the customer as the mortgage originators are remunerated by the lenders for generating and keeping business,” Mrs Syme said.
“In this way, the mortgage origination industry has helped create competition among the lenders, because they will not get business if their products are not competitive.”
Mortgage Industry Association of Australia WA branch president Barry Barr, also a mortgage originator, agreed and said without the strength of the mortgage originator sector, interest rates would be two to three per cent higher.
“We forced traditional lenders, mainly banks, to drop their interest rates and fees because we simply started to use alternative lenders,” Mr Barr said. “Of course the banks caught on and dropped their rates to remain competitive.
“Consumers have gained a lot from this, lower rates, lower fees and more service at no cost.”
But consumers were not the only winners from the mortgage origi-nation industry.
“It is cheaper for the banks to go through mortgage originators for mortgage business,” Mrs Syme said.
“They don’t have to hire staff, they don’t have to pay workers compen-sation insurance, they don’t have to pay to train their employees.”
“We get the clients for them and bring the loan to them, already processed, in most cases all they have to do is okay it.”
BankWest national sales manager for origination sales and services Phil Carrington said mortgage originators were BankWest’s prime source of business for home loans.
“We do like to use mortgage originators,” Mr Carrington said.
“I suppose it is also a case of the client looking for a choice. Mortgage originators do not just sell one product and they have a wider distribution.
“They are especially good on the east coast where (BankWest) does not have a branch representation.”
Mr Carrington said BankWest was one of the first banks to have dealt with mortgage originators and it had watched the industry grow from small beginnings into the strong industry it is today.
And this growth is not likely to stop for some time.
“WA is ahead of other States and I think it could grow to the point where another 10 to 15 per cent of home loans could be written through an originator,” Mr Carrington said.
However, he said this figure would be the cap, as a good proportion of bank customers still enjoyed using alternatives such as Internet and telephone banking, as well as branch banking.
Mrs Syme agreed, but said most people preferred personal service when it came to home loans.
“A mortgage is an emotional issue in that people are going into debt and they need reassurance,” she said.
And, in what is a rare occurrence, Western Australia is leading the nation in the development of this industry, which was last year ranked in Australia’s top five growth industries.
Nationally, more than 25 per
cent of borrowers use mortgage originators to arrange a loan, while in WA the figure is closer to 50 per cent.
In coming years the national figure is predicted to climb to 40 per cent, however some sources indicate the industry has the potential to follow in the footsteps of the US, where between 70 and 80 per cent of borrowers use mortgage originators.
The reasons for the attraction are many, but two of the biggest are the level of service and range of products a mortgage originator can offer, according to The Loans Café director Anne-Marie Syme.
“Most people who are applying for a home loan are also working and they do not have time to go bunny-hopping up St George’s Terrace to see what lending packages the different banks have on offer,” Mrs Syme said.
“Many mortgage originators are available twenty-four-seven and we can offer customers over 700 product combinations from 28 financial institutions.
“And we are not going to try and cross sell them frills or other financial services that they don’t need or want.”
Mortgage originators assess the needs of each client and research loan packages from lenders and then present the most suitable options to the customer.
Once the customer has selected which organisation they will use, the mortgage originator will put together the customer’s loan application for them.
Mrs Syme said mortgage originators also could offer their clients a degree of certainty as most would not submit a loan application to a bank if they had even the slightest suspicion it would be declined.
“And the service is completely free for the customer as the mortgage originators are remunerated by the lenders for generating and keeping business,” Mrs Syme said.
“In this way, the mortgage origination industry has helped create competition among the lenders, because they will not get business if their products are not competitive.”
Mortgage Industry Association of Australia WA branch president Barry Barr, also a mortgage originator, agreed and said without the strength of the mortgage originator sector, interest rates would be two to three per cent higher.
“We forced traditional lenders, mainly banks, to drop their interest rates and fees because we simply started to use alternative lenders,” Mr Barr said. “Of course the banks caught on and dropped their rates to remain competitive.
“Consumers have gained a lot from this, lower rates, lower fees and more service at no cost.”
But consumers were not the only winners from the mortgage origi-nation industry.
“It is cheaper for the banks to go through mortgage originators for mortgage business,” Mrs Syme said.
“They don’t have to hire staff, they don’t have to pay workers compen-sation insurance, they don’t have to pay to train their employees.”
“We get the clients for them and bring the loan to them, already processed, in most cases all they have to do is okay it.”
BankWest national sales manager for origination sales and services Phil Carrington said mortgage originators were BankWest’s prime source of business for home loans.
“We do like to use mortgage originators,” Mr Carrington said.
“I suppose it is also a case of the client looking for a choice. Mortgage originators do not just sell one product and they have a wider distribution.
“They are especially good on the east coast where (BankWest) does not have a branch representation.”
Mr Carrington said BankWest was one of the first banks to have dealt with mortgage originators and it had watched the industry grow from small beginnings into the strong industry it is today.
And this growth is not likely to stop for some time.
“WA is ahead of other States and I think it could grow to the point where another 10 to 15 per cent of home loans could be written through an originator,” Mr Carrington said.
However, he said this figure would be the cap, as a good proportion of bank customers still enjoyed using alternatives such as Internet and telephone banking, as well as branch banking.
Mrs Syme agreed, but said most people preferred personal service when it came to home loans.
“A mortgage is an emotional issue in that people are going into debt and they need reassurance,” she said.
