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An ASX-listed aggregator has said that it expects the near-prime market to be a “growing sector in the next three to five years”, and is looking to service more customers in this area.
Chris Slater, general manager of AFG Home Loans, told The Adviser that the company had launched four new products in the AFG Home Loans suite for borrowers looking for an “out-of-the-box” solution earlier this year, and is working with brokers to potentially bring out more.
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Mr Slater said: “We've just started to dabble our toe into [the near-prime] market. I think most aggregators would probably tell you that if you’re converting 70 per cent of the loans coming in, you’re doing very well. But, there's still 30 per cent that aren’t ever going to hit the floor. That can be billions of lodgings a month; it’s a big number.
“So it just makes sense to look at that space and see if there are other opportunities in there that are being missed.”
As such, the aggregator launched the Go Full Doc near-prime home loan, Go Low Doc near-prime home for self-employed borrowers, Go Plus Full Doc near-prime home loan with a flexible credit policy, and Retro Low Doc home loan for self-employed borrowers in June of this year to target more “self-employed and out-of-the-box customers”.
Mr Slater commented: “We've have actually launched products into this space, and we do think that that is going to be a growing sector in the next three to five years, and we think it's a space we'd like to have in the AFG home loan brand.
“So, from a home loans perspective, we see that market as a growing sector. We're definitely doing a lot of work behind the scenes to make sure that those types of solutions are in there for our customers and we're definitely looking into that space and talking to our brokers about what sort of offerings we can bring out.”
He adds: “We’d like to be able to go to our brokers and say: ‘If you can't get it set as a prime loan, here's a near-prime solution that we can make it work.’”
The specialist lending market has increased in recent years, following on from tightened credit policies and lending curbs by the major banks.
According to Royden D’Vaz, national head of sales and distribution at the Bluestone Group, the specialist lending market has seen increasing demand from “the self employed and credit impaired”.
Mr D’Vaz told The Adviser: “SMEs and the self-employed, especially the sole operators and the smaller businesses, is where the growth will come from [in the future]. More and more of these people are looking for solution, whether it be a cash injection into the business to grow and develop it, or ongoing capital expenditure.”
Mark Haron, principal of aggregator Connective, has previously told The Adviser that brokers “need to look at specialist lending” to help their clients and take advantage of burgeoning demand.
[Related: Brokers ‘need to look at specialist lending’]
