Confidence in the non-bank sector has re-emerged with 50 per cent of brokers now more open to writing non-bank products compared to 12 months ago.
Non-bank market share has slumped to around five per cent since the credit crisis hit, but after a torrid year mortgage managers and originators are again better positioned to offer competitively priced products.
While capital markets remain sluggish, the recent government initiative to inject $8 billion into the non-bank sector has boosted liquidity and demonstrated backing for the sector.
According to the latest Mortgage Business straw poll, 46 per cent of the 620 respondents were not more open to offering non-bank products while 4 per cent were undecided.
Paul Taylor, from Toowoomba Home Loans, is one broker who would be more open to writing more non-bank products as long as they were competitively priced.
“People are nervous about securitised loans, however if the government’s rescue package transpires I believe we will see a return of the non-banks.”
“Unfortunately all we have to compare to at the moment are the majors. I wouldn’t give anything to the majors if I didn’t have to and I don’t think borrowers would either.”
Mr Taylor also believes that more brokers are now considering non-bank products because their commissions are better.
Paul Woodley, from Woodley Loan, told Mortgage Business that one of the key reasons brokers had not been writing non-bank products was because of the previous lack of availability of competitive products.
“There is generally a lot of unhappiness among brokers towards the banks but we really have been stuck with them – once funding levels are more even I think we will see a strong return to the non-banks,” Mr Woodley said.
“I’d much prefer to use non-banks; my preference would be away from the big banks”.
But according to Mortgage Force’s WA and SA state manager Corey Drew, the big banks service levels, which are simply not coping with the increased business, may also have affected broker sentiment.
Mr Drew also believes that a number of competitive product launches in the last few days have also helped the non-bank sector.
“We’d like to see non-bank market share pick up because improved competition is really needed – it’s very important non-banks remain in the market.”
“I think a lot of brokers have been reluctant to recommend non-bank products, but as funding improved we might see them recommending non-banks more. Consumers are looking for a good price in the current market – so price is important.
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