Mortgage industry needs to re-shape
The region’s fledgling mortgage sector is well-placed to re-invent itself as a world-class model, according to Mungo Dunnett, Chairman of Mungo Dunnett Associates.
“The GCC has a once-in-a-lifetime opportunity to wipe the slate clean and build its mortgage sector from the ground up armed with the benefit of hindsight gathered from home markets, and worldwide,” he said.
He mooted that regional players must pay respect to a four-prong framework. “This all may sound very elementary, but the industry must be built upon a better understanding of consumer behavior, sustainable sales ambitions and not short term gains, a sturdy, relevant use of best practices in credit risk and a sound, open regulatory framework. These principles will ensure that the GCC mortgage industry is on the right track.”
Dunnett is slated as a keynote speaker at the upcoming GCC Mortgage Summit. He will present a freshly published white paper that looks at the lessons to be learnt from the mortgage crisis in the West.
“I have been looking at the implications for starting and managing mortgage businesses in this new business cycle.
The key message is to use the learning we get from elsewhere and apply it to this market. First and foremost, an overtly optimistic view of the economy and lack of alternate scenario planning can trigger a downturn of business in the wake of the smallest upheaval in market conditions.
He also cautioned that a sales-driven culture with little or no focus on credit risk assessment will always lead to imbalance.
“The industry must decide who the customers are and not risk long-term stability over quick-return. Lack of insight into consumer behavior is an all-too-frequent fundamental weakness. In these times particularly, this will lead to wrong assumptions at the product development and marketing stage. Unless you know your consumers, you will never find the real triggers of their satisfaction and dissatisfaction.
“Indeed, another key learning is that if growth takes place at the sacrifice of quality and sustainability, then there is an increasingly susceptibility to market risks, as we have seen. This delicate balance remains in the new era.”
Dunnett urged that scenario planning is paramount. “In these uncertain business cycles, it is essential that mortgage businesses always have a Plan B prepared”
The GGC Mortgage Summit 2010 will run for two days (June 2-3 2010) in Bahrain. The forum is pegged to attract more than 100 firms from across GCC including real estate developers, real estate service providers and other organisations that provide support such as insurance companies, legal, research and rating agencies.