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Top 10 Originators 2012

Staff Reporter 9 minute read

This year’s The Adviser Top 10 Originators had their work cut out for them in 2011, but they have proved they are more than up to the challenge

WHEN THE federal government ban on exit fees took effect on 1 July 2011, many non-bank lenders were forced to introduce clawbacks as a protective measure.

As the results of The Adviser’s Top 10 Originators report reveal, however, the clawbacks had little impact on the non-banks’ bottom lines.

Several lenders, including National Finance Club, managed to grow their loan volume year-on-year – a fact that is unsurprising to many brokers.


According to the latest The Adviser sentiment survey, more than 70 per cent of brokers expect to offer non-bank products to their clients over the coming year.

Of those that do, 66 per cent believe they will have fewer problems recommending non-bank products to their clients now that exit fees have been scrapped.

Todd Hunter of wHeregroup says non-bank products have actually become easier to recommend now that exit fees are gone.

“Non-bank lenders have always had to be competitive in the mortgage space and this will only make them more competitive,” he says.

Mortgage EZY’s head of sales and marketing, Chris Wisbey, agrees and says the ban ultimately created a “level playing field among lenders”.


“Consumers’ dislike of the major banks continues to grow, which ultimately works in the favour of all non-bank lenders,” says Homeloans’ Greg Mitchell.

According to a survey conducted late last year by Homeloans, of investors and owner occupiers (non-first home buyers), 73 per cent of respondents were open to using alternative lenders while 69 per cent of first home buyers said they would consider a non-bank.

“We’re certainly seeing evidence of that at Homeloans,” he says. “We’ve seen a 53 per cent increase in national awareness since August 2010.”

Positive trends like these in the face of adversity are evident in The Adviser’s Top 10 Originators ranking.

Some lenders have managed to grow their book, loan volumes or loan numbers significantly.

Homeloans, for example, had another stellar year, settling strong residential mortgage volumes over the 2011 calendar year.

But while some originators managed to significantly grow their book, others struggled in what remains a highly competitive lending environment.

Indeed, it is almost as though the non-banks listed in this year’s Top 10 Originators ranking fall into one of two camps.

While some, including Better Mortgage Management and National Finance Club, have posted impressive growth figures others, such as Collins Home Loans, have clearly struggled.

Despite the tough year, the originator remains bullish about the year ahead: The company’s general manager, Allan Willoughby, says the only way from here is up.

“People are already expecting the majors to move out of cycle with the Reserve Bank. If and when this happens, the non-bank sector will be ready to swoop in and reclaim some of that all important market share.”

Brokers realise and appreciate that non-bank lenders can offer products and services that remain unrivalled by the majors.

The sector’s customer service proposition is, and always has been a winner, as too is its product diversity. This is especially true for borrowers who struggle to meet the usual bank lending criteria.

However, the originators’ proposition runs much deeper than that. A renewed focus on product innovation was the silver lining of the GFC cloud.

Self-managed super fund (SMSF) products, for example, are increasingly becoming solid business generators for originators.

Last year, Mortgage EZY launched an SMSF loan, a move that was well received by brokers.

And according to a recent online straw poll conducted by The Adviser, lenders involved in SMSF-related lending could begin to see even greater movement in the months ahead.

Of 274 respondents to the survey, 38.3 per cent of brokers said they had written an SMSF loan.

Mortgage EZY’s Chris Wisbey says he wouldn’t be surprised to see this percentage climb above 50 per cent in the not-too-distant future.

“I think a lot of people have become disillusioned by the share market and the banks in general,” he says. “While an SMSF loan is a financial product, it offers borrowers a lot more security, which allows them to control their life post-retirement. “As these products gain traction with borrowers, they will also gain traction with brokers.”

Technology-based innovation has also risen to prominence within the non-bank sector, with some originators creating portals to better engage broker partners.

This year’s ranking shows Australia’s Top 10 Originators are all focused on these key areas – at least to some extent. Some have prepared themselves for future growth; others took the plunge during the GFC and have already realised significant gains.

The Adviser ranked Australia’s Top 10 Originators based on current performance, taking into account recent market conditions and benchmarking against last year’s results.

To be considered, each originator had to meet certain stringent criteria.

Importantly, an originator’s product had to be available for distribution via brokers, with a minimum of 25 per cent written by the broker channel.

For originators that operate as part of an aggregation group, a minimum of 50 per cent of broker-originated volumes had to be written by brokers outside their associated aggregation groups.

These criteria aim to remove those lending businesses that distribute via a proprietary channel, such as franchise outlets.

Originators were invited to participate in a survey requesting information on loan volumes, number of loans written, loan book size, access to funding, broker distribution and aggregation panels.

The survey also gathered information on the size of the BDM support team, geographic presence and staff numbers.

This information was then collated, allowing The Adviser to compare and contrast originators on key business data. Current performance data were analysed and comparisons made with data provided for the 2011 rankings, including the percentage change in loan volumes, number of loans written and total loan book value.

Once the Top 10 had been shortlisted, they were ranked based on key business data, with a weighted score applied to each ranking position. Data used to establish the final ranking include:

  • number of loans written in 2011
  • value of loans written in 2011
  • extent of an originator’s broker distribution
  • percentage growth in number of loans written compared to 2010
  • percentage growth in loan volume compared to 2010
  • overall size of 2011 loan book

Taking this approach made it possible to determine an originator’s ability to evolve with the market while maintaining a level of consistency in its operations.

These criteria help provide a good indicator of the strength of an originator’s strategy and the quality of its management. They also allow the originator’s funding capabilities, as well as flexibility in product and policy, to be highlighted.


WHILE CONDITIONS may be shifting in their favour, Australia’s non-bank lenders are still doing it tough.

The sector’s market share still remains well below the sizeable volume it enjoyed just a few years ago.

According to data from Australian Finance Group, non-banks currently account for under 10 per cent of all home loans written – down from 20.4 per cent in 2007.

This falling market share can be attributed to several causes, primarily the global financial crisis, the abolition of exit fees and the fierce rate battle current being fought between Australia’s major banks.

But while non-banks are obviously still smarting from the battering they received recently, those who have hung in there are stronger for it.

The sector is now more clearly focused on meeting its customers’ needs by offering, among other things, a broader range of products.

Several lenders have re-entered the high LVR space in the past 12 months – ahead of the majors – while others have introduced self-managed super fund loans to their suite of products in a bid to cater to a rapidly growing borrower sector.

Then there are the originators such as Homeloans that have dug in and spent the past 12 months working on their branding. According to Homeloans’ general manager, Greg Mitchell, the rewards have been well worth the effort.

Mr Mitchell remains bullish about the year ahead and says there is no reason why non-bank lenders can’t grow their market share, although doing so will not be without its challenges.

“Over the last year, the majors have become really competitive on price, which is an area the non-banks are unable to compete in,” he says.

Higher funding costs as well as global economic woes have made staying competitive next to impossible for Australia’s non-bank lenders.

However, Mr Mitchell says the market moves in circles and the price war in which the majors are engaged will eventually come to an end.

“I don’t think the majors’ ‘price war’ is sustainable long term,” he says.

“We are competitive on service, competitive on products and competitive on broker remuneration.

“When they re-price their products – and they will re-price – the non-bank lenders will be waiting in the wings, ready to pounce.”

Top 10 Originators 2012
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