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Writing non-conforming loans helps brokers to significantly broaden their customer base, increase referral sources and drive revenue growth
The non-conforming loan sector has been in existence for more than 15 years and is an integral and growing part of the Australian mortgage market. At $2.3 billion in outstanding loans, the non-conforming sector currently comprises a small portion of Australia’s $120 billion of outstanding residential mortgage backed securities.
This represents a fraction of the $1.4 trillion mortgage market. However, according to data from Standard & Poor’s, the outstanding value of non-conforming securitised housing loans has roughly doubled since its trough in April 2012.
Industry commentators place the current value of Australia’s non-conforming loan sector at between $3 billion and $5 billion per year, with some suggesting $10 billion and an annual rate of growth of up to 40 per cent.
This positive outlook was reinforced by Reserve Bank of Australia assistant governor Guy Debelle who recently said that market conditions in residential mortgage-backed securities were at their most favourable since the financial crisis.
With considerable growth expected, it is clear that the non-conforming sector represents a significant opportunity as brokers realise the potential to broaden the depth of their customer base, increase their referral sources and drive revenue growth through diversification.
Bluestone encourages brokers to embrace this lucrative audience and become more familiar with the products available in the non-conforming space.
Now governed by the National Consumer Credit Protection Act rules, there is no need for brokers to hesitate in recommending non-conforming loans to their clients. We also see SMSF lending as a key area of growth.
Having re-entered the lending market in 2012, Bluestone provides a suite of purpose-specific products that help a wide range of borrowers obtain mortgage finance that has not been attainable through a traditional lender – and as the market continues to grow, we plan to regain our status as the non-conforming lender of choice.
Peter Wood is general manager, Asia Pacific at Bluestone Mortgages
