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‘Overwhelming shift’ in consumers wanting alternatives: Homeloans

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Lucy Dean 3 minute read

Both consumers and brokers are increasingly looking to alternative lenders for finance as price differentiation and market “noise” pushes customers to look wider, Homeloans says.

Homeloans today (28 August) announced a normalised net profit after tax (NPAT) of $18.7 million before accounting for merger transaction and restructure costs for the 2017 financial year. Homeloans acquired RESIMAC in October last year.

Speaking on the result, joint CEO Scott McWilliam said: “We're still a very small part of the market when you compare what we're writing compared to some of the big banks, the majors and also the regionals. So, our ability to grow is obviously a lot easier than it is when you're a big bank.

“The non-bank sector still remains a small part of the overall sector, but obviously there is strong momentum at the moment because customers and brokers are obviously seeing value in the alternatives in the market today.”

Price differentiation is forcing customers to consider a wider array of lenders in place of the same institutions they may have been dealing with in the past, Mr McWilliam said.

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“There’s a lot of movement and noise in the market, whether it be turnaround times, pricing and ... interest rate movements over the last 12 months. With that type of noise, customers and brokers want to know what else is available.”

Operating in the non-bank sector has meant Homeloans is “absolutely customer and broker-centric”, Mr McWilliam said, adding that the group is service-orientated which also appeals to consumers.

Homeloans reported an increase in total settlements of 20.0 per cent year-on-year ($3.6 billion). Additionally, principally funded loans and advances were up by 22.2 per cent at $6.6 billion. The lender’s third-party broker book was $4.0 billion.

Mr McWilliam said: “We're obviously extremely pleased with the result. It is a result that speaks well to the merger which is almost a year old now ... and it obviously supports the merits of it and [the fact that] there is strong momentum in the market supporting our book growth, and the third-party space is supporting the combined organisation as well. There's a lot to be happy about.

“We're still only a small part of the sector and there's a lot of room to grow.”

Looking to the future, Homeloans is expecting settlement volumes to remain strong in FY18, arguing that as a non-bank lender, Homeloans is well positioned for growth.

“Settlement growth will continue to be supported by the third-party broker market, with Homeloans having access to up to 85 per cent of brokers, which will be supplemented by loan growth from our direct channels,” the lender said in a statement.

“Assuming current economic conditions prevail for the remainder of the financial year, the FY2018 financial year result is expected to be stronger than the FY17 result.”

[Related: Lender will increase broker commissions]

‘Overwhelming shift’ in consumers wanting alternatives: Homeloans
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