Banks attitude to originators "against consumer interests"
- 11 Mar 2009
It is beginning to be clear, says Tony Clarke, MD of the Rawson Properties Group in a company media release, that a main reason why mortgage bonds are now so difficult to obtain is that certain banks are refusing to accept bond applications from mortgage originators.
Clarke was recently told by a bank executive that that bank now believes the cost of applications through an originator “to be too high.”
“The originator’s commission is now said to be excessive. Time and again we are seeing potential buyers treated as if they have absolutely no chance of getting a bond even if they have successfully pre-qualified in terms of the National Credit Act. At the lower end of the market two good agents recently notched up 14 sales in the month – only to find that 12 of the 14 could not get a bond.”
Clarke said that although two of the banks are adopting this war-like stance and appear determined to cut out originators, the other two are still co-operating with them, albeit with reluctance.
“It could be,” said Clarke, “that the banks are now tired of having to compete against each other, to “bid” on every potential bond because mortgage origination ensures the clients get the best interest rate.”
“This is the situation that the originators have brought about – although it makes life tough for the banks, it is very much in the consumers’ interests and should be accepted, subject perhaps to one or two modifications.”
“I am confident that originators will survive this onslaught,” added Clarke. “Until recently they were successfully handling 70% of all bond applications. At Rawson Finance we have dozens of letters from grateful clients saying how much they appreciate not having to deal with four banks themselves and how satisfied they are with the mortgage package achieved.”
Clarke claims that, as in most disagreements on financial matters, the “ego element” is now playing a role in all the discussions.
“The good news, however, is that this appears to be fading away and that those in top positions are working on a solution that will continue to put the consumers’ interests first.”