PRODUCT RANKING -- Low doc mortgages1452 people have read this article
|
| Monday, 26 April 2010 |
|
Low Doc mortgages remain a key market for Australia’s lenders and an essential product for the self-employed, those with variable incomes or for borrowers that do not have the required financials to secure mainstream finance. Today’s low doc market is a shadow of its former self compared to four to five years ago. Few lenders now remain totally committed to the low doc market, however a number of lenders still offer competitive products. The drive in recent years has been to push self-employed borrowers to full doc loans, requiring significantly more work for the borrower in providing proof of stable income and financials. Whether or not low doc lending will return to its previous levels remains questionable while lenders’ appetite for risk remains at a minimum. This month, The Adviser again called on its broker panel and data analysis partner Pisces to rate and rank Australia’s leading low doc mortgage products. Eight low doc mortgages, recommended as market leaders by our regular broker panel, were assessed on policy, interest rates, fees and other tangible attributes by research partner Pisces. In ranking the nation’s low doc mortgages we applied a robust process that also included an appraisal by our broker partners on servicing times, availability, broker support and overall policy. The methodology engaged was consistent with previous rankings to produce a holistic view of lenders’ products and broker servicing capabilities. PRODUCTS The eight low doc mortgages for consideration in this ranking included:
STANDOUT PERFORMER CBA performed strongly over both assessment areas: product metrics and broker perception. The bank came second in both segments and scored particularly well in product policy and availability – helping it to secure top position in the overall ranking. There’s no dismissing CBA’s strong market share plus good broker servicing as a key driver for its solid first place ranking. Further down the field, Homeside’s low doc mortgage was rated number one by Pisces in terms of product specifics; however this ranking dropped overall as a result of poor broker attitudes towards servicing and support. As such, Homeside finished the ranking in third – though there was just one point separating Westpac in second position and ANZ fourth. POLICY AND PRICE IS PARAMOUNT According to Pisces’ general manager of mortgage business Vincent Turner, policy was the driving factor behind the loans and their subsequent rank. “LVR is still very topical, but acceptable security for low doc loans was also a factor in the overall ranking, as were product features,” Mr Turner said. “Some of the major lenders’ products come with a lot of extra features, which distinguished them from their competitors.” But while some of the major lenders had the stronger policy, they were, in many circumstances, not the cheapest – which also affected their ranking. The scenarios applied by Pisces included assessing products on two accounts: $450K and $650K at an LVR of 60 per cent or less. Suncorp and Homeloans performed poorly in comparison to the other lenders in terms of the borrower scenarios. Alternatively, all five majors performed very strongly in both scenarios, spurred by cheaper interest rates. |
