At the annual conference of the Canadian Association of Accredited Mortgage Professionals (CAAMP
) in Montreal, Quebec, 1,500 delegates heard from the CEO’s of the leading mortgage industry associations in Australia, Canada and the U.S discuss the current global predicament faced by the mortgage industry following the recent financial crisis.
Titled “The State of the Mortgage Industry – A Global Perspective”, the panel featured, John Courson of the U.S. Mortgage Bankers Association, Phil Naylor from the Mortgage and Finance Association of Australia and Jim Murphy of CAAMP.
During the hour-long discussion, topics covered included competition, compensation and regulations in each of the three mortgage markets.
Courson described how the U.S. mortgage market is undergoing a “total remake” since the recession decimated the industry, taking market share from 70 to 17 per cent and shrinking the number of mortgage companies from 54,000 to approximately 8,000. He called the events a perfect storm. “The push to increase homeownership expanded credit products at the same time house prices were skyrocketing,” he said. Currently, Courson said, 13 per cent of all mortgages are either in default of foreclosure.
Murphy cited Canada’s banking system, better lending practices, CMHC securitization and a climate of more “responsible home ownership” as reasons for the better mortgage market conditions in Canada.
Speaking on Australia’s current conditions, Naylor explained that the financial crisis had all but wiped out non-bank lenders is his country and without some source of capital, the sector will surely die. He said his association has been studying Canada’s market and believes, “our market needs funding similar to that provided by your Canada Mortgage and Housing Corporation (CMHC) to revive non-bank lending for brokers.”
In addressing compensation, Naylor spoke of how his country’s big-four banks recently slashed fees for brokers and how the response of some brokers in Australia was to begin charging consumers for their services. He said those brokers have been successful at convincing clients that they offer more than just transactions and that the added value of advice is worth the cost.
As Canadian mortgage professionals grapple with overlapping provincial regulations and licensing, according to Murphy, his Australian counterpart spoke of Australia’s recently introduced National Consumer Protection Act and how the MFAA was able to ensure their already established standards for members was included in the final draft of the NCPA.
Massive regulatory changes are on the way in the U.S said Courson, while he sees a stabilization of the market. “We are finally seeing the bottom.”
- John Tenpenny, Editor, CMP