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Jessica Darnbrough
Australia’s non-bank lenders cannot truly compete against the majors, one leading aggregation head has claimed.
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Speaking at the Citi Investment Conference in Sydney yesterday, Aussie’s founder John Symond said competition outside of the big four and their subsidiaries "doesn’t exist”.
“Up until the early 2000s, non-banks accounted for 15 per cent of all mortgages written. Today, they account for less than 1 per cent. They simply don’t exist anymore,” he said.
Mr Symond went onto say that had he not changed the Aussie business model 10 years ago and diversified into mortgage broking, the company might not be alive today.
“While I could not foresee the GFC, I did start to see volatility in the market. And, I was worried enough to change my business model.
"Had I not moved the business into that large supermarket style of mortgage broking, I would probably be in the same boat as many of the originators – fighting to keep my doors open.”
Responding to Mr Symond’s comments, RESI’s chief executive officer Lisa Montgomery said Aussie had made the right decision all those years ago.
“Around the time of the GFC, we saw a lot of the prominent non-bank players take on equity partners and expand into broking. For many, including Aussie, I think it was a wise move given the way their business is shaped,” she told The Adviser.
That said, Ms Montgomery said Aussie’s decision to move into broking was not the right decision for all non-banks and some, including RESI, continue to perform very well in the current market.
“Our business has a lot of strength. We are privately owned, which provides us with a lot of control and a really strong balance sheet. At the moment, business is good. We have just achieved a record week in terms of mortgage applications, which is simply fantastic. On top of that, we are generally seeing consistently good results.
“I agree with John and believe for some non-banks times are tough. Some are not coping with the new legislative requirements and competition is intense.
“That said, there is still a place for non-banks, especially those that have been around for a long time and have established strong partnerships.
“Consumers are wanting to move outside of the big four and this can only be good news for Australia’s non-banks.”
