The head of an ASX-listed non-bank lender is seeing a significant increase in broker-originated loans as the third-party channel looks beyond the big banks for mortgage solutions.
Homeloans Limited chief executive Scott McWilliam told The Adviser that ongoing policy changes and a two-tiered home loan market with differentiated pricing is forcing brokers to look past the handful of traditional lenders they have supported for the past few years.
“It bodes well for your non-banks or your lesser-known lenders,” Mr McWilliam said.
“Brokers are forced to look wider and therefore look at other alternatives, and I would argue a stronger alternative,” he said. “I think the brokers are enjoying what they’re seeing.”
Mr McWilliam said Homeloans Limited is a good example of a non-bank lender that is benefiting from current product volatility across the lending landscape.
“We are seeing a lot of flow from brokers who had not used us previously and had wished they had,” he said. “It’s the environment that has forced them to do it.
“In an environment where there is differentiation on price and policy and probably more driven by uncertainty in the eyes of the broker, that flow should remain strong."
His comments come after two Sydney mortgage brokers told The Adviser they have started using non-bank lenders for investor loans, as the banks tighten their credit policies and lift rates on landlord lending.
Sydney-based broker and CEO of Multifocus Properties & Finance Philippe Brach told The Adviser the group is shifting its strategies when setting up structures for its investor clients.
“We used to use the big four banks a lot because pricing and products were unbeatable,” Mr Brach said.
“Nowadays, we tend to shift some satellite loans to mortgage managers such as Mortgage Mart or AFM, who are not taking deposits from the public and have access to funds from different sources at reasonable rates and at much better servicing levels,” he said.
Mr Brach provided one example of a client who is an experienced investor and wanted to finance his next property.
“He can borrow about $200,000 from the majors today, whereas using a mortgage manager who will take existing debt at actual repayments for servicing, he can borrow $800,000,” he said.
Smartmove co-founder and director Simon Orbell said his Sydney brokerage is already starting to use specialist lenders for investor loans.
“Just in terms of that more unique approach that some of the smaller players with a more nimble approach can take towards serviceability and some of the credit policies and niches they create,” Mr Orbell told The Adviser.
“We think that will only continue as lenders realign themselves and find out where those new niches fit.”
With the third-party channel adapting to pricing and policy changes, Mr Orbell said specialist lending is something that most businesses should be looking at a little more closely.
“Not necessarily for the non-conforming deals but more the specialist piece for investors,” he said.