Broker sentiment towards the non-banks remains strong despite the increasing market share captured by the majors.
The latest weekly Mortgage Business online poll revealed that a resounding 92.4 per cent of the 527 respondents surveyed would recommend non-bank products to their clients.
Only 7.6 per cent of said that they would not recommend non-bank products.
Strong sentiment to the non-banks is also consistently reflected in the Mortgage Business quarterly sentiment survey.
Over 75 per cent of respondents in the Q3 sentiment survey said that they expect to recommend a non-bank product over the coming quarter.
But strong sentiment towards non-banks has failed to translate into business.
ABS data shows that the vast bulk of mortgage volumes continue to be channelled towards the banks with the majors accounting for the lion’s share.
In September 2009 banks accounted for 87.96 per cent of owner occupied housing commitments.
Recent CoreData research revealed that Westpac and CBA collectively held 48.9 per cent of all outstanding residential lending by value. NAB is in third spot with 12.8 per cent of market share, while ANZ is fourth with 12.5 per cent.
But despite the dominance of the major banks, support for the non-bank sector remains strong among brokers particularly for clients that increasingly fall outside their lending criteria.
“The situation now is the same as about five years ago when second-tier banks held a niche in the lending market as a result of the restricted lending practices by major banks,” Moshe Moses, principal at Niche Lending told Mortgage Business.
His comments were supported by Katrina Rowland, partner at Mortgage Success.
She said that regardless of the statistical prevalence of the big four, she continues to recommend non-bank products because of their “flexible and common sense lending”.
“Typical scenarios where I would recommend non-bank products to clients would be in the case of low doc loan and construction loans” Mrs Rowlands said.
Ms Rowland said that in recommending non-bank products to clients she needs to be assured that the non-bank lender has a solid reputation. “There needs to be trust,” she said.
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