Slowdown may make banks love brokers: AMBL

Tuesday 12 October 2004

While all the talk currently is about banks trying to reduce the costs of dealing with mortgage brokers, it may actually pay them to deal with brokers when the housing market contracts, according to Brent David, general manager at aggregator AMBL.

By The Landlord

"The lenders don’t pay brokers unless they give them business," David argues.

Not having to pay for brokers’ overheads will surely provide banks with a cashflow benefit.

"It is my opinion that in a contracting market, the mortgage broking channel will become a much more attractive channel for the lenders. After all, they will still have all of their fixed costs in maintaining the retail branch network and in particular mobile mortgage managers in a market that is contracting," he says

Rather than restrict their dealings with brokers, the banks are more likely to review the profitability of maintaining mobile mortgage managers and could well start laying them off, particularly if the slowdown turns out to be a lengthy one.

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