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Despite a concerted move into the prime space, non-banks still remain the answer for trickier clients with specialised needs
As Resimac’s chief commercial officer, Allan Savins, is quick to point out, pre-GFC it was non-banks that led the market in product and price. However, post-2008, as funds tightened, non-banks gained a reputation for high-priced borrowing for customers that typically failed to meet the majors’ lending criteria.
Now most non-banks want to compete on price in the prime space; however, that’s not to say they’ve abandoned borrowers with specialist needs. For Mr Savins, it’s all about offering a full suite of products for different scenarios and not, he stresses, flying a flag for distressed borrowers who’ve been shown the door by the banks.
“Non-bank lenders have always been market leaders in product innovation and development, which gives the appearance of targeting borrowers that the majors haven’t,” says Mr Savins, “but the reality is we are looking to capture a broader cross section of borrowers – borrowers that are a typical customer of a major bank and of course those that major banks have forgotten about.”
Mr Savins also believes nonbanks are often better geared and better staffed to handle trickier applications. “Faster turnaround times, personalised service, the ability for the broker to speak directly with the credit decision makers are just some of the service benefits non-banks offer,” he argues.
“These differences can be critical, particularly when trying to relay the complexity of a transaction to a loan assessor.”
La Trobe Financial’s chief investment officer Paul Wells agrees that the bulk of a broker’s business is prime loans and the big banks are the natural providers of those loans. Brokers can be so used to their standard products that when they come across deals that the banks can’t readily handle the easiest path is to pass on them, Mr Wells says.
“Brokers need to know that non-banks exist, that we can readily provide a solution and that we can get the broker through that deal in a relatively normal timeframe and without making it too hard,” Mr Wells says.
“These deals require a slightly modified approach but the idea is that as a specialist lender we create realistic solutions and do as much of the work as possible. The broker earns their fees and strengthens their profile as a ‘can do’ provider to their clients.”
Mr Wells was also quick to stress that La Trobe was working alongside aggregators and the third-party channel to enhance its reputation for prime lending, commercial lending and SMSF lending.
Bluestone Asset Management’s general manager Peter Wood also wants to dismiss the idea that non-banks only lend to customers the majors have rejected. “It’s unfair for borrowers to be categorised that way,” he says.
“Many borrowers that Bluestone provides loans to have been through a major life event such as illness, divorce, unemployment or similar, which has affected their ability to meet their financial commitments and has impacted their credit rating. By providing a solution to these borrowers we provide them with an opportunity to get financially back on track.”
Borrower categories:
- Financial setback – borrowers who may have experienced financial hardship due to illness or a small business failure
- The self-employed – often overlooked by the banks and representing 2.1 million Australians
- Low-doc clients – those who don’t have the paperwork in place from their accountants
- New migrants – who don’t yet have a credit history in Australia
- People returning to the workforce – mothers returning after maternity leave or someone returning from long-term carer’s leave
- Credit-impaired – due to unpaid loan payments or overdue rates payments
- Divorcees – where acrimony between parties has meant the mortgage is heavily in arrears
