Speaking at a recent FBAA Business Breakfast in Melbourne, Shadow Assistant Treasurer Michael Keenan said that mortgage brokers play a vital role in market and mortgage efficiency.

Mr Keenan said his experience working in real estate showed him the positive effects mortgage brokers have on the industry. He noted that banks’ margins were 3 to 4 percentage points higher 15 years ago and are now much lower now due to increased competition in the industry.

The Shadow Assistant Treasurer spoke about the general economy before talking about proposed licensing of brokers and intermediaries. He mentioned recent developments including the US moving towards recession and the lowest consumer sentiment in Australia in 15 years.

He said that businesses don’t have a lot of confidence in the way the economy is being managed and believes the Rudd Government should choose its words more carefully when speaking about the economy.

Mr Keenan said the Government is inconsistent when speaking about the economy by saying the economy is weak when speaking at home, while saying it is strong when speaking overseas.

Negative statements about the economy, he said, are damaging and could become a self-fulfilling prophecy by lowering confidence of businesses and consumers.

Mr Keenan said that no government in Australia has inherited such a strong economy. Although the IMF has said the subprime collapse will effect world growth, Australia will continue to grow at around 3 per cent per year.

Speaking about the proposed legislation of mortgage brokers, Mr Keenan said that regulation should be done in a sensible way with industry. “Don’t use a heavy hand of regulation. You need to consider the costs of regulation to industry and have less regulation, not more, when possible.”

He said the FBAA is playing an important role in providing industry feedback on the proposed legislation and that the exposure draft which was supposed to model legislation “could be a nightmare on a state by state basis.”

Mr Keenan said that policymakers recognise concerns about mortgage brokers, but he noted that there has been an unfair characterisation of the industry in the media. “The media coverage has been unhelpful. The industry hasn’t created a crisis as in the US.”

Lending Central