For the New Zealand Mortgage Brokers Association (MBA) 2001 was a year of progress with growing membership numbers and progress on all fronts including training and education, substantial increase in support and "buy in" to the concept of the association by other stakeholders in the mortgage industry especially the lenders.
Also there is now a far greater awareness from the borrowing public as to the benefits of dealing with a member of the association. This latter comment is borne out by the increasing share of mortgage business written by mortgage brokers. Currently brokers write about 25% of all mortgages.
So, where to from here?
In a wide sense, the New Zealand economy, for 2002 anyway appears to be on a growth curve and with that a confidence is borne for the public at large to make major decisions.
One of those decisions may well be to buy or upgrade a house or investment property or to refinance their existing mortgage. This bodes well for mortgage brokers in that they should see increasing business volumes and profits for the year.
However, not all will see an increase in business. The market has become very competitive and only those that are smart in maintaining a high service proposition to their clients and lenders alike will see the benefits of a good year.
To do this mortgage brokers must strive to continue to keep pace with lending policies, marketing techniques and technological changes and demands.
The association sees it has a continuing role in this regard and during 2002 will continue to provide the platform for further education through conferences, seminars, its website and newsletters.
This year is already seeing the start of the technological change especially in the area of delivering, processing and settling mortgage applications.
Delivery of applications by electronic means will in time allow good mortgage applications to be approved without "human interference" and this will require brokers to up skill themselves in this area as it will enhance their ability to provide a fast and efficient service to their clients.
With these and other changes we will see lenders place an increasing duty of care on brokers during 2002.
With the expected growth in the business levels of mortgage brokers and the technological changes taking place lenders will place heavy reliance on brokers to correctly assess and investigate loan applications and in particular verifying information, notwithstanding whether the lenders own policy requires it to be proven or not.
I am sure this is not unique to New Zealand but it will be a continuing message from the association to its members through out the year.
This year will also most likely see a change in the structure of doing business between mortgage brokers and lenders.
Most lenders have carried out a costing exercise on doing business with brokers and some in an effort to make it as cost efficient as possible will look towards requiring minimum mortgage volumes from its brokers.
This may not bode well for the "one man" mortgage broker operations who could struggle to provide the required volume.
The association does not necessarily agree with this approach by lenders. We would argue that quality not quantity is more cost efficient.
Following the Australian trend this will lead to what is known as mortgage aggregators.
A mortgage aggregator brings smaller mortgage broking operations under one umbrella for volume purposes and while they continue to trade under their own brand name the collective volume passing through the mortgage aggregator, who holds the agreements with the lenders well exceeds the minimum volume requirements.
Finally 2002 will most likely see the finalisation of the development of an expanded NZMBA into a mortgage industry in conjunction with the Mortgage Industry Association of Australasia (MIAA).
The MBA, while representing a good share of mortgage business, does not represent the mortgage industry as a whole. The mortgage industry in New Zealand has undergone major change in recent years.
It is in the interests of the both the lenders, mortgage insurers, mortgage managers, originators and brokers to have a healthy vibrant coordinated and professional industry.
The lenders and MBA have expressed the concern that without a raised profile and sufficient ongoing funding the viability of the MBA could become restricted in its ability to achieve its objectives of creating the professional industry it was designed to do.
The MBA has therefore agreed to be part of the working committee to prepare a business case for the establishment of the NZMIA; however this is on the condition that it does not lose its identity or its position in the overall industry.
The MBA committee would hope to see a greater strength from such an association not only from a financial perspective but also as an industry voice on matters business and political that may impact on our daily business lives.
Rob Tucker is the chairman of the New Zealand Mortgage Brokers Association.
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