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The non-major banks go BOOM!
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The non-major banks go BOOM!

Huntley Mitchell 13 minute read

With increasing competition among the lenders, The Adviser asks brokers why they prefer using non-major lenders over the big four

Victoria Wakenshaw – mortgage broker, Loan Market

Non-major loans: approximately 40 per cent

Who is your number one non-major lender?

Macquarie Bank is currently my preferred non-major lender. This is due to strong BDM support, fast turnaround times, upfront valuations and easy accessto credit assessors. They also have great ongoing customer service for clients post-settlement.

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What areas are non-major lenders winning in over the majors?

In terms of the loan sizes and LVRs that are typical of my clients, the non-major lenders have some of the lowest rates in the current market, and are also waiving or reducing some of their fees to win more business. However, all lenders are very competitively priced at the moment. I also find as a broker that I receive better support from the non-majors in terms of turnaround on approvals and deal escalations.

What could non-majors do better in order to win business?

A few of the non-majors have recently changed some of their credit policies to become more flexible than they were previously. This has enabled me to place more loans with non-majors where I previously would have gone with a major.

I’ve really noticed a change in this regard in the past six months or so, and I think they should keep doing this. I find more of my clients’ loan applications are placed with lenders due to policy rather than rates or products, regardless of the lender.

Tony Bice – director, Finance Made Easy

Non-major loans: approximately 60 per cent

Who is your number one non-major lender?

I use quite a few non-major lenders, but if I had to mention two, it would be Macquarie Bank and Suncorp. I like them because their rates are very sharp and they have minimal entry fees. They are very easy to sell to clients given the very low basic variable rates and minimal fees to apply.

Why do you prefer using non-major lenders over majors?

I like using non-major lenders primarily because I can get so much closer to the credit departments to discuss decision making. If there is something that needs clarification, I can discuss the issue either with the BDM who will take it up directly with the assessor, or I can speak to the assessor directly.

What areas are non-major lenders winning in over the majors?

Some of the rates with non-major lenders are very sharp, and it would seem that this is the space that they need to play in in order to drive volumes from brokers. Majors have a little more latitude with possible stronger branding and branch accessibility, hence why their rates are not quite as sharp in some cases.

What could non-majors do better in order to win business?

I’m not sure that they have to do too much at all, other than what they are doing now. I guess the fact that the sheer volume of applications sent through majors ... means that non-major lenders need to be constantly on their game looking for points of differentiation such as the leading rate.

Continual product refinement and sharp pricing will also keep the non-majors top of mind with brokers, which they rely so heavily on for their volumes.

What are the drawbacks of using non-major lenders?

The only possible drawback is having to educate the client on the background of a non-major lender, as clients may not be as familiar with them and their products as the majors that they have grown up with. In many cases, clients like the strength and comfort of a major, and that’s fair enough.

Non-major lenders will never win that battle, but I think as time goes on – and we’ve seen this already – clients are becoming more familiar with non-majors.

What are the challenges of talking a customer around to a non-major lender?

There aren’t many. Once you have gained the client’s trust and explained the positives of a non-major lender – rates, product features and most importantly, you as the broker being the first port of call for anything they need – means there are very little challenges.

Hayley Grant – director, HMG Home Loans

Non-major loans: 60 per cent to 70 per cent

Who is your number one non-major lender?

Suncorp Bank. They have an excellent range of products and competitive rates, as well as supporting me and my business, which is crucial.

Why do you prefer using non-major lenders over majors?

I feel non-majors can offer a more personalised service to my clients through the life of the loan. They are a one-stop shop which helps me service my clients and maintain strong relationships with them. 

They’re good with pricing and matching, if not beating the rates of the majors, which helps me go above and beyond in terms of offering my clients sharp rates. Non-majors continue to o er that competitive space in the market which is imperative to keep the broker proposition strong.

What areas are non-major lenders winning in over the majors?

The processes, from start to finish in some cases, are more streamlined. Therefore, I am able to offer much quicker turnaround times from application to approval, through to settlement. Also, BDM support from a non-major tends to be more personalised and consistent, which assists my business and the service I provide my clients.

Direct access to a credit analyst also helps in workshopping a deal, and they tend to look outside the box a bit more.

What could non-majors do better in order to win business?

The key to increasing their market share is continuing to offer competitive pricing and a diverse range of products comparable to the majors’ [offering]. Strong relationships with brokers need to be a priority for the non-majors as this personal service should be their point of difference. They need to offer the service of a small bank, but the overall strength of a big bank.

What are the drawbacks of using non-major lenders?

Some clients in general gravitate to major lenders from a safety aspect. I think this was highlighted around the GFC when borrowers fled to majors seeking security and comfort. Now that competition is  erce and non-majors have the access to competitively priced funds, it’s game on!

What are the challenges of talking a customer around to a non-major lender?

A client’s perception of the non-majors in terms of branding, market reputation and lending security is the biggest challenge. As brokers, we need to have the knowledge and expertise to make our clients feel at ease with the non-major options we present to them. They should have the security and comfort of dealing with us, and we need to be the experts they seek and provide the comfort they need.

Lisa Maxwell – principal, Aussie Annandale

Non-major loans: approximately 75 per cent

Who is your number one non-major lender?

I use a number of non-major lenders regularly, including Bankwest and Macquarie Bank, but if I had to choose one it would be ING Direct because of its choice of products and low fees.

What areas are non-major lenders winning in over the majors?

Non-major lenders are very competitive with their pricing in the current market, and their service levels are generally pretty good. The feedback I receive from clients post-settlement indicates that they have a better ongoing relationship with nonmajor lenders rather than the majors.

I think that non-major lenders have to work harder to get the business, and seem to be able to deliver a better experience for the client. They also respect the broker client relationship, and with a lender like INGDirect, channel conflict is non-existent.

What could non-majors do better in order to win business?

Non-major lenders are less flexible when it comes to credit policy and less likely to consider scenarios that are outside the box. More marketing could help with brand awareness for some lenders too.

What are the challenges of talking a customer around to a non-major lender?

Occasionally a client is a bit reluctant togo with a lender that they are not that familiar with and prefer to stick to a major lender.

Steve Pratt – manager, Mortgage Choice Noarhunga

Non-major loans: approximately 80 per cent

Do you prefer using non-major lenders over major lenders?

It really comes down to what the clients want. We always start the conversation by asking them what they want from their lenders, and then we ask them if they have a preference for using either a major or a minor lender.

Ninety per cent of the time, the customer doesn’t have a preference, so it means we can keep all lenders on the table.

The automatic credit scoring that all the majors have can affect the speed of processing loans, but also drops out a few people just because it’s an automated process and doesn’t allow you to discuss it further with the assessors. We know that every deal through the minors is being assessed on its merits.

What areas are non-major lenders winning in over the majors?

In most cases, the minors are very responsive to what we need, unlike some of the majors. I think that’s due to the majors not having the same amount of flexibility in their systems as the minors. As I said, most of the minors seem to treat every deal on its merits rather than its automatic credit score.

What could non-majors do better in order to win business?

I think the question should instead be ‘What can the majors learn from the minors?’

What are the drawbacks of using non-major lenders?

If there’s going to be a drawback, it’ll be because the non-majors don’t have a branch or branch access.

However, with the available technology these days, people are doing their banking and getting their home loan approved through many different ways – having a branch isn’t such a big deal for a lot of people.

But some of our clients definitely still want the comfort of going into a bank and talking to a person face-to-face.

What are the challenges of talking a customer around to a non-major lender?

We don’t try and talk them around – we definitely let them make the decision. We talk upfront to all of our clients about what they want out of their lender, and if they’re not adverse to using a major or a minor, we’ll explain to the client the benefits of both and leave the decision up to them.

I think familiarity is the main issue. However, we’re starting to see more non-majors advertising on TV and online, and sponsoring events and sporting teams, so I think we’re becoming more familiar with the different brands.

Sarcha Sagisaka – property wealth consultant, Momentum Wealth

Non-major loans: 50 per cent to 60 per cent

Who is your number one non-major lender?

My lender choice is primarily policy driven. My client base consists mostly of property investors, and both AMP and Macquarie have excellent policies and products geared towards these clients.

Why do you prefer using non-major lenders over major lenders?

I find non-major lenders often have a great culture of working with brokers that permeates throughout the organisation. A willingness to work with brokers among the major lenders is a little less predictable depending on who you are working with at the time.

What areas are non-major lenders winning in over the majors?

The non-major lenders are far ahead in terms of policy and flexibility, and are often in front in terms of price. Most importantly, the non-majors are more accessible. I can pick up the phone and talk to the manager, the assessor, or the accounts team and have a problem solved straight away. With the majors, I am often unable to access the person I need directly or the information I need to solve the problem.

What could non-majors do better in order to win business?

Non-major lenders are competing with the branch presence of the majors, so they need to make sure they have excellent online banking and phone service, apps for smartphones and tablets, and access to ATMs so that they can be equal in terms of convenience and service.

What are the drawbacks of using non-major lenders?

The lack of branch presence, which is very important to some clients and their home loans. However, it is less important to investment loan clients and a lot of younger clients.

Shannon O'Neill – mortgage broker, Clarity Financial Group

Non-major loans: 16 per cent

Who is your number one non-major lender?

ING Direct – because they offer competitive rates, flexible products and low establishment fees, as well as client recognition of the brand.

What areas are non-major lenders winning in over the majors?

For us, they are simply an alternative to the majors, and we find the younger web-savvy generation can feel more comfortable in using a lender who doesn’t have established branches.

What could non-majors do better in order to win business?

I can only speak from our experience in Canberra, but people here generally like familiarity when choosing a lender. The big four lenders receive plenty of publicity – clients in everyday life visit their branches, walk past their ATMs and watch their commercials, which makes the big four household names.

However, the non-majors generally don’t have branded ATMs or branches, and may run limited advertising. This in turn makes the non-major lenders unknown to many potential clients, and this can lead to distrust and therefore a lack of commitment from the borrower to use their services. From my perspective, in order for the non-majors to have a greater opportunity to win business, they need to increase their brand awareness.

What are the drawbacks of using non-major lenders?

The biggest hurdle we encounter with the non-majors is turnaround times. With all the promises of speed and efficiency that circulate our industry, having to wait two to three weeks for an approval can be seen, in the client’s eyes, as poor performance on the broker’s part, and puts the client on side with the lender before the relationship has even truly begun.

What are the challenges of talking a customer around to a non-major lender?

On the client side of things, internet banking can be cumbersome. Speediness to resolve minor issues can diminish the relationship between the lender and the client, and subsequently between the broker and the client.

Post-settlement actions like switching can be difficult. It can also be overly complicated to do simple tasks such as loan changes from principal and interest to interest only.

Ivo Dejesus – director, Sanford Finance

Non-major loans: approximately 70 per cent

Who is your number one non-major lender?

I’ve recently started using Macquarie Bank again after some good feedback from other brokers, but did so reluctantly following their withdrawal from the market during the GFC. However, following an initial meeting, I was satisfied that Macquarie are committed to the broker channel and I have been extremely pleased with my overall experience with them thus far.

What areas are non-major lenders winning in over the majors?

Definitely service. Firstly, there is the ability to speak directly to the assessors and resolve any potential issues with the application before they arise. Speaking to the person who is assessing the deals is vital in our business and can save a lot of time. I tend to find the major banks’ broker support channels to be nothing more than gatekeepers that o er little to no assistance.

Secondly, non-majors tend to have a common-sense approach to lending, which is not always evident with the major banks.

Then you have BDMs such as Michael Abboud (Macquarie) and Rodney Cottam (Homeloans) who are always available to assist when required, making my job a lot easier.

What could non-majors do better in order to win business?

This will vary depending on the lender. However, desktop/ short-form valuations for sub-80 per cent LVR loans would be a great improvement and assist in competing with the majors. In some cases, non-major lenders are already accepting contract of sale for purchases, an added benefit.

What are the challenges of talking a customer around to a non-major?

Customer awareness. Many clients are still reluctant to use a non-major, even when they can see the benefits.

Accessibility to branches for any non internet banking transactions is also an issue for some, although with advances in technology, I believe this will become less of an issue, going forward.

The non-major banks go BOOM!
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