Australia’s lenders are expected to become increasingly innovative heading into 2013, a new report by a lenders' mortgage insurance company has revealed.
According to Genworth’s Home Grown: Mortgage Industry Perspectives report, launched yesterday, sluggish credit growth will force lenders to think outside the box when it comes to lending practices.
“While a majority of lenders are experiencing sluggish growth, this is likely to lead to innovations of lending techniques, from implementing new online and offline channels to cost strategies to reduce the impact of decreased credit demand,” Genworth’s chief executive, Ellie Comerford, said. “If lender expectations that consumers will continue deleveraging in 2013 prove accurate, then the urgency of implementing new lending techniques and channels cannot be underestimated.”
But while Australia’s lenders expect consumers to continue to deleverage in 2013 on the back of employment insecurity, mortgage brokers are much more optimistic about credit growth.
More than two thirds of those surveyed believe credit growth will pick up in the year ahead, compared to the 12 out of 14 lenders that believe it will continue to contract.
Mortgage brokers were also quick to point out, however, that they need competition between lenders to increase in order to grow their businesses in a low credit growth environment.
Mortgage brokers also emphasise the need for lenders to focus on the loan approval process to improve loan volumes.
“The survey highlighted the need for lenders and brokers to use more similar criteria and methods during the credit sign-off process and to work more collaboratively to improve efficiencies, especially around the credit scoring policies. Doing so could result in quicker and more efficient borrowing processes, ultimately driving credit demand,” Ms Comerford said.