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The prudential regulator’s crackdown on investor lending presents a fantastic opportunity for brokers to explore the extensive range of products and services that specialist lenders offer, writes Cory Bannister, La Trobe Financial’s vice president and head of distribution.
In light of APRA’s efforts to rein in lending to property investors (limiting growth in this sector to 10 per cent), finance brokers have reported that tougher credit conditions now exist in the market, with one such broker being quoted as saying that the current situation is like “a mini-GFC for investors”.
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Banks have tightened borrower serviceability ratios, removed negative gearing benefits, capped maximum LVRs and are no longer offering discounts above the published rate for property investors looking to borrow. Brokers are now finding that transactions that were once a fait accompli are now being passed over by the major banks.
We expect to see, and certainly encourage, more brokers to consider specialist lenders for their property investment loan scenarios, as APRA only regulates banks and other authorised deposit-taking institutions (ADIs), meaning that it is business as usual for specialist lenders.
At La Trobe Financial, our raison d’etre since we began 63 years ago is to service those borrowers who are under-served by the banks. So when, for whatever reason, the banks narrow their lending spectrum, we’re ready to service those borrowers, including ones caught in the current “mini-GFC for investors”. We would like to remind brokers that La Trobe Financial was one of the few lenders to remain open to trade normally through that time.
This spells good news for finance brokers who rely heavily on ADIs, as specialist lenders’ products are now bank-competitive, and in some cases bank-superior. This presents a great opportunity to explore the product ranges of real estate credit specialists like La Trobe Financial, and we would expect brokers to be pleasantly surprised by the extensive product ranges on offer. Specialist lenders are known for their flexible, solution-oriented approach to credit which involves working closely with brokers to structure the deal to suit all parties, including tailoring the commission structure. For example, La Trobe Financial is now well-known for its ‘no clawback on broker trail’ approach.
We are treating this situation as a fantastic opportunity to showcase the superior service proposition for which specialist lenders are known, and to create relationships with brokers that will outlast the current policy changes, which in our opinion are a temporary response to current economic conditions only.
