New research has suggested that 3.6 million people could be “underserviced” in terms of finance, which a specialist lender has said is a key opportunity for brokers.
Research released by Pepper Money recently revealed that 18 per cent of the 1,100 people surveyed said they had been turned down for a home loan by a financial institution and nearly one in 10 had been rejected by one of the big four banks.
The research, which was undertaken to highlight the growing proportion of Australians who are being “locked out” of the financial system, found that more than a quarter (26 per cent) of the Aussies that were turned down for a loan were refused because they were either self-employed or worked part time.
Further, more than half (54 per cent) of those rejected for a loan at a bank were “unaware” that there was another option available.
Speaking to The Adviser, Pepper Money’s managing director, Australian mortgages and personal loans, Mario Rehayem, said that if the figure of loan rejection were extrapolated out to reflect the Australian population, that would equate to 3.6 million people being “underserviced”, thus representing an opportunity for brokers.
He explained: “People are not qualifying for loans for an array of different reasons; it's not just because they are self-employed, it could be the type of income that they have. The emerging gig economy has really started to come to the fore… And that finding [of people being unable to access finance] will continue to grow because the old-style policies are not really adapted to the new style of Gen Y and the gig economy.
“We are a nation of entrepreneurs and we do embrace upcoming opportunities and when we do that… it might not mean that we've been self-employed for a minimum of two years [the common requirement from major institutions lending to self-employed persons].
He continued: “These are the factors that the industry needs to have a really good think about; yes, everyone has to take a calculated risk on the top of borrowings and money that we lend out, but at the same time we cannot be ignorant or oblivious to a change and a shift in the way people work.”
Mr Rehayem said the fact that people are unaware of all the options was a key opportunity for mortgage brokers.
“The lending market needs to be very adaptable and flexible and that's why the broker market is extremely important because they have the opportunity to offer products for the different types of customers or borrower profile types that are emerging day in and day out.”
Mr Rehayem added that the research also showed that 42 per cent of Australians do not feel their financial institution understands their needs and financial goals, while 63 per cent said they withhold information from their main financial institution.
He concluded: “There is a growing disconnect between Australians and financial institutions, which is causing many Aussies to fall through the cracks. Brokers play a vital role in helping to access these people, understanding their whole situation and helping them to find a solution that meets their needs.”
AFL legends competition
Brokers accredited with Pepper Money could see themselves playing beside AFL legends in August, with the lender calling it a “once in a lifetime opportunity.”
As part of a curtain raiser for when the St Kilda Saints play against the North Melbourne Kangaroos on 20 August, the competition winners will play alongside “St Kilda greats” Burke, Loewe, Milne and Fisher.
To enter, brokers need to tell Pepper Money why they should become an AFL legend, in 25 words or less.
Aaron Mliburn, director of sales and distribution said the “once in a lifetime opportunity” was valued at $3,000 and could be “a chance [for brokers] to realise their childhood ambitions”.
In addition to two 20-minute halves of play at Etihad Stadium, the winners will receive a personalised playing kit, an official Saints Legends Game Footy Record, including their player profile, an invitation to attend the post-match Saints Premier Lounge game day function and a Saints Legends Game DVD pack.
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