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Australian First Mortgage’s director Iain Forbes explains how the lender’s enhancement of its SMSF and commercial products is taking AFM closer to its goal of being a ‘one-stop shop’
We hear a lot about the struggles non-bank lenders are currently facing. How is Australian First Mortgage faring?
We have achieved a lot of milestones of late. Most recently, we launched an SMSF product for both the residential and commercial space. Not many lenders offer SMSF products for both areas – we do.
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We have always had affection for commercial lending, so this was a natural fit. In addition, we have very high hopes for the SMSF space. While this market has existed for some time, it has largely been left untouched by the third party distribution channel and I think there are some real business opportunities for brokers who want to get involved in this particular lending area. People are keen to invest in property. They see bricks and mortar as a safe investment, especially in these volatile times. The problems overseas will probably get worse before they get better. As such, I think the SMSF lending space will become increasingly more popular.
That said, brokers who want to be involved in this space need to ensure they are up-to-date on the product area and know exactly what is required of them. These loans are more complex than your standard vanilla home loan, so brokers need to make sure they have the right training and support before diving head first into this lending area.
Before they can effectively sell these types of loans to clients, they need to be educated about the process. At the end of the day, these types of loans cannot be done by clients themselves. They are looking for advice from professionals – which is where brokers come into play.
What SMSF training or support is AFM offering to its broker partners?
AFM’s joint managing director, David White, is currently hosting training and educational sessions for our broker partners. We are passionate about SMSF lending and we know how important it is for brokers to have a good understanding of the lending sector – which is why David is hosting the various training sessions.
David is spending two days a week in training sessions at the moment, which just highlights how strong the demand is from brokers. In addition, we have made sure all of our staff are educated in the SMSF space so that they can answer any broker questions with confidence.
SMSFs aside, what other products and services is AFM looking to enhance at the moment?
We are always looking to enhance our product suite. We want to make sure our service is the best in the market, our rates are competitive and our product policies are flexible.
In the first week of June, AFM reduced the interest rate on our variable commercial rate by 30 basis points for the second time in 10 days.
In addition, we launched a new commercial fixed rate loan at an interest rate of 6.90 per cent fixed for 3 years, to a maximum LVR of 65 per cent.
This new product is only available for a short period of time, and deals must be approved before 30 June and settled by 31 July 2012.
Finally, in July, we launched a new commercial product that really favours residential brokers. We think it is a good product and we believe it is something that is fairly unique to the marketplace.
At AFM, we want to help small residential brokerages diversify into commercial lending. We know how important diversification is to brokers and their bottom line. Similarly, we understand how commercial lending can sometimes be difficult to break into as the products are seen as “difficult”. It is for this reason that we decided to create a suite of commercial products that are broker friendly and do not require years of experience to sell.
How would you characterise current lending conditions?
Lending conditions have been tough for some time. Luckily for us, we have never had to say, ‘We don’t have any money to lend’. We have a series of funders, all of whom are incredibly supportive of us and what we provide in the marketplace.
We are constantly active and constantly searching for new terrain. At present, we are seriously looking at introducing a white label suite for smaller brokerages or mortgage managers who cannot gain accreditation with some of the nation’s biggest lenders.
Down the track, we want to become a one-stop shop, offering a little bit of everything – from residential products to commercial products, white label products, leasing and beyond. We are already involved in many lending areas, but we have no plans to stop now. I think there is always a new opportunity just around the corner that we can dive into provided we have the know-how, the funding and the right people for the job.
You have recruited several new staff of late. Do you plan to ramp up your numbers even further?
Absolutely. To be frank, some people work out and others don’t. We want to employ the best people for the job; ¬ we do not want to settle for second best.
We are happy with the structure we have right now and the team we have in place, but you can never say no to growth. If we could grow our team and market share in this current environment that would be a magnificent achievement for AFM.
Moving forward, I am confident of growing the business in every way.
