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June 07: Winning borrowers' hearts and minds

Staff Reporter 4 minute read

Capturing market share from the banks will be a long hard battle, but the latest Genworth Financial Mortgage Trends Report reveals Australia’s borrowers could be shifting their allegiance.

When it comes to spreading the word about the best Australian mortgage products and service, non-bank customers are shouting the loudest. Genworth Financial’s third annual report has revealed a massive 33 per cent of its respondents with a non-bank loan based their decision upon a recommendation – an impressive figure when compared to the banks’ 18 per cent or the credit unions’ 22 per cent.

As you’d expect competitive pricing and products were naturally important for most respondents. However, this year’s survey also highlighted the increased value borrowers are placing on customer service and flexibility when choosing financial products – a result that should bode well for mortgage managers and originators.

Approximately 15 per cent of respondents had chosen a non-bank home loan. From this pool, 42 per cent indicated that loan flexibility was of greater significance than low ongoing rates, fees and charges. This is encouraging news as it indicates increasing borrower savvy in understanding how a product's features can meet their own financial needs.

When comparing customer satisfaction levels 49 per cent of non-bank borrowers were “very satisfied” with their choice, another promising indicator against the banks 43 per cent.

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The inside word

Genworth Financial country executive and director Peter Hall gives Mortgage Business’ Victoria Rooney his take on what the findings mean for the non-bank sector.

How can mortgage managers and originators increase their share of the recovering first home buyer and investor markets?

In terms of competing effectively in the market, our survey has shown a need for the non-bank sector to focus on educating their customers as well as targeted marketing – especially where product selection is concerned.


Product innovation and choice is one of the non-bank sector’s greatest offerings, but customers need to first understand and trust the value of the product. Adopting targeted marketing initiatives (similar to the banks) will help the industry better connect with potential customers.

This needs to be replicated by those on the front line, actively selling these products [brokers and loan writers]. Product development days and increased support for those dealing face to face with customers will help the mortgage management sector convey value and engage customers with new products.

A third of the survey’s respondents used a broker for their last home loan. How can mortgage managers and originators increase market share through building stronger relationships with brokers?

Third party distribution is becoming increasingly important to Australian lenders. 33 per cent of the survey’s respondents used a mortgage broker for their last loan citing flexibility as the reason for their choice.

Service and support are critical for brokers to do their job well. Brokers will naturally return to the lenders with the processes that provide the best value for their customers; training and professional development are just as important too.

Concentrating on issues like compliance and building brokers’ skill sets will also help to ensure that they [brokers and loan writers] not only understand your products better, but will help forge lasting partnerships.

Consumers are still sceptical about products such as 100% and shared equity loans – 36 per cent considered them ‘too risky’. What can the non-bank sector do to change these perceptions?

All new products take time to be adopted by the mainstream public. Targeted marketing and education will again be the key to demonstrating value. The [non-bank] sector already has an excellent culture of word-of-mouth referrals, and similar to the introduction of lo doc loans, for example, general acceptance will gradually take over.

In the meantime, the industry should be concentrating on increasing its value proposition in terms of service and speed. Technological support and a good IT infrastructure are vital competitive tools that every mortgage manager should be using to improve their service capabilities.

How can the non-bank sector challenge the banks in the future?

The playing field for growth between the banks and non-banks is currently fairly even, largely due to a growing trend of borrower disloyalty. Customers want better pricing, service and product, and they’re not afraid to go looking for them.

The mortgage management sector is in a good position to listen to the needs of their customers and capitalise on the growing brand awareness being created by lenders such as GE Money, RAMS and Aussie Homeloans.

Borrowers have considerably more choice these days. If the non-bank sector wants to increase its share of the market, it simply has to offer something better than the banks. The good news is that this is not restricted to pricing alone; it includes flexibility, service and product innovation.

June 07: Winning borrowers' hearts and minds
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