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Specialist lender Pepper believes there is an “overwhelming” number of brokers who are unware of the opportunities within the non-conforming borrower market.
The group wrapped up its Insights Roadshow last month, which saw close to 900 attendees learn about the opportunities that non-conforming lending could provide for their business, and how to better understand the unique needs of traditional and non-traditional borrowers.
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“A lot of brokers were surprised to hear that six in 10 non-conforming borrowers are missing out on getting a home loan, and the untapped opportunity that exists there for them to assist those borrowers to receive finance,” Mario Rehayem, Pepper’s director of sales and distribution, said.
Mr Rehayem noted that the majority of brokers were not only “unaware of the sheer size and make up of the non-conforming market, they were also surprised to hear that Pepper’s research indicates the biggest reason borrowers are classified as non-conforming is because of unusual income, at 33 per cent”.
Pepper research (shared at the Roadshow) found that 39 per cent of non-conforming borrowers apply through a traditional lender but are not approved, while almost a quarter (24 per cent) do not apply at all, believing they will be knocked back.
Moreover, 38 per cent of non-conforming borrowers hold off applying for finance until they think their financial or employment circumstances have changed for the better. A further one in four know their circumstances will likely result in a higher interest rate.
“The most disheartening statistic is that the research found 16 per cent of non-conforming borrowers have been told they can’t be helped at all,” Mr Rehayem added.
“Borrowers’ needs change all the time – whether this is their own circumstances or external factors – and its important brokers understand that a client might be prime one day and not the next.
“That’s why we are encouraging brokers to educate themselves on the credit policies and niches of specialist lending and specialist lenders, so that if a time comes when one of their clients is no longer suited to a prime loan, they can still continue the relationship, and continue adding value to their business.”
Pepper’s Insights Roadshow was held in Sydney on 14 July, Brisbane on 15 July, Melbourne on 17 July, and Adelaide and Perth on 23 and 24 July respectively.
Mr Rehayem said due to the pleasing feedback received from attendees, the Insights Roadshow could become a regular fixture on the lender’s education calendar.
“We hope to make our Insights Roadshow an annual event through which we can deliver informative and relevant content to our third-party distribution partners,” he concluded.
