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The proportion of brokers using non-banks for their clients climbed considerably last month, largely driven by client circumstances.
Analysis of the latest Broker Pulse survey by Agile Market Intelligence has revealed that non-banks found favour among broker respondents in larger numbers in February 2024.
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The survey of 287 brokers found that 56 per cent of brokers used a non-bank for their clients’ loan applications over the month, up from 46 per cent in January.
The survey was conducted between 1 and 15 March 2024 to ascertain brokers’ overall experiences when submitting loan applications to lenders.
More than three-quarters of brokers (76 per cent) said their primary reason for selecting a non-bank was client circumstances, the highest proportion among any lender segment (closely followed by the major banks at 74 per cent and non-majors at 58 per cent).
However, while non-banks were growing in popularity for their broader credit policies, only a third of broker respondents said they used non-banks for their product pricing (down from 39 per cent in the previous month). Around 79 per cent of brokers used non-major banks for their pricing and around half said that this was the main driver for using the larger banks.
Among the non-banks, Advantedge (owned by National Australia Bank) was the most commonly used non-bank lender over February, with 16 per cent of respondents stating they had lodged a deal with the wholesale funder.
Advantedge also scored the highest three-month satisfaction rating among the non-banks, with 94 per cent of brokers who used it saying they were satisfied with it over December 2023, January 2024, and February 2024.
Several brokers reported that they were impressed with the support provided by the lender’s business development managers (BDMs), its quick turnaround times (the number of business days taken to reach an initial decision), and efficient processing and settlement.
One broker commented on the ease of the loan application process, noting it was a digital process from the initial stages to settlement.
Advantedge also had the fastest turnaround times among non-banks in February, reducing from three days in January to two days in February.
Pepper Money was the second most commonly used non-bank, according to the survey, with 11 per cent of brokers reporting that they used it (up from 7 per cent in January).
Brokers reported having positive experiences while using the lender and collaborating with its BDMs.
More than three-quarters (76 per cent) said they were satisfied with their experience at Pepper Money over December 2023 and January and February 2024. However, while one broker said they had a largely positive experience, they noted that the credit approval process and documentation were a “bit clunky”.
Macquarie tops commonly used lender list
Among the other lender segments, major bank usage increased from 73 per cent in January to 78 per cent in February, while non-major bank usage reduced by 2 percentage points to 83 per cent.
For the first time since September 2023, Macquarie Bank was the most commonly used lender among all lenders in February.
Almost half (45 per cent) of all brokers said they used the non-major bank for a mortgage last month, up 11 percentage points from the 34 per cent in January.
Brokers commended the lender for its policies, speed of assessment, good BDMs, turnaround times, and frequent communication.
However, while one broker asked for more flexible pricing, another noted that the non-major bank is most effective for “vanilla PAYG deals” with loan-to-value ratios of under 80 per cent.
ANZ was the second most commonly used lender at 43 per cent (up from 40 per cent in January).
While only 32 per cent of broker respondents reported using the Commonwealth Bank (CBA) in January (the third-lowest level on record), it regained some ground, placing third in February with 39 per cent of brokers using it.
Westpac ranked fourth in the list (36 per cent), while NAB was the fifth most commonly used lender (31 per cent), according to the Broker Pulse survey.
To find out more about the Broker Pulse survey and participate in future surveys, visit the Broker Pulse survey website.
[Related: CBA broker usage dropped in January: Broker Pulse]
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