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Non-major lenders: a broker's-eye view

by Huntley Mitchell14 minute read
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Seven leading aggregators and mortgage groups offer their take on how the non-major lenders are performing and identify the areas in which they need to improve


What percentage of loans do you write using non-major lenders?

I have recently taken all banks out of my credit guide, which means I no longer write loans with banks. Therefore to answer your question – 100 per cent.


Who is your number one non-major lender and why?

Resimac Limited is my preferred non-major lender and has been for the past three years. I have supported non-major lenders since entering the industry 10 years ago, writing loans with Challenger, Bluestone, Advantedge, Adelaide Bank, ING (white label), GE (white label), Firstmac, Origin (Columbus) and now Resimac.

In the first years, I tried them all – NAB, CBA, ANZ, Westpac, Suncorp, Macquarie, ING, St. George, RAMS. I tried all the majors whilst writing predominately my manager’s white-label product through Challenger (now Advantedge). The easiest loans to write, with the fastest turnaround times and superior service before during and after settlement, by far was Challenger.

I soon learned the tactics of the big banks – in particular when discharging a loan – and I encountered first-hand the big banks’ branch networks competing directly against me, where there was clear difference. My application was knocked back but approved when the client went direct. It didn’t take me long to work out that the big banks were not my business partners.

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

Non-major lenders that do not have a branch network and do not advertise their products or interest rates are my preferred lenders because they rely 100 per cent on the broker network to source business. They may distribute their products through a mortgage manager or aggregator, but the only way the product is sold is through a mortgage broker.

So by default, they have to engage with brokers. Mortgage brokers’ focus is on building their business, and the best way to do that is to have loyal clients – and to have loyal clients, a mortgage broker has to deliver great service and flexible products at a fair interest rate. So when a non-major engages with the mortgage broker who is focused on providing client satisfaction, the non-major – again by default – has a business model that is mortgage broker and client- centric.

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

Commissions, interest rates, products, service, turnaround times, communication – you name it, Resimac does all of this and more, better than a big bank.

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

Teach new brokers, before they are bank-brainwashed, how to sell a non-major lender product. I have sat in a mortgage manager’s meeting with some vintage brokers with 15-plus years’ experience who say “How can I sell this Advantedge product over a bank product when the client has never heard of Advantedge?”

Are there any drawbacks of using non-major lenders?

Yes. I have always found their serviceability to be more stringent compared to the big banks, but I actually like this. I prefer the fact that my clients have had to jump higher serviceability requirements, because the chance of them ever defaulting is simply reduced. Non-major lenders in general take a more conservative approach and will follow the lender’s mortgage insurance policy.


What percentage of loans do you write using non-major lenders?

With the new changes recently to investment lending, this figure seems to be altering between owner-occupier loans and investment loans. Our highest volume of loans with the non-major lenders would definitely be within the owner-occupier space, where we would settle between 40 to 60 per cent of loans written with non-major lenders. When reviewing investment lending, this does alter and would represent 30 to 50 per cent of investment loans written. This varies from month to month. We don’t look to write a certain percentage with non-major lenders.

Who is your number one non-major lender and why?

CUA and Macquarie are both great alternatives when looking at non-major lenders. Both of these lenders offer great service (pre- and post-loan approval), low rates, minimal to nil fees and charges, and both have
a very holistic view of both owner-occupier and investment lending options.

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

There is always the customer who’s had a previous bad experience with a major bank and doesn’t want to use them again. We have clients who have also heard about bad experiences with major lenders from friends or family and in turn choose not to consider the lender based on recommendations.

Some clients like that the call centres are not outsourced. And when it comes to products, we also find that non-majors often hold more competitive rates.

As a broker, I find that the BDMs for non-major lenders typically do look after a smaller portfolio of brokers. As such, you are often able to establish a strong relationship between the BDM and yourself. As a broker, this allows you to discuss any concerns or questions quickly and easily.

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

Non-majors are sometimes not as proactive as the major lenders when it comes to settlements and approvals. The processes are not always as streamlined as what is available from the major lenders.

Non-major lenders could also look to implement features such as FAST-re-fi or same-day settlement options for top-ups.


What percentage of loans do you write using non-major lenders?

Over 50 per cent of my loans written go to a non-major lender.

Who is your number one non-major lender and why?

I have historically used ING Direct as my main non-major, but Macquarie Bank is now seeing a lot of my loans. My relationship with ING stems back over 10 years, and we have a very strong working relationship where we can have our files escalated where required. The service proposition is great, and because ING doesn’t have a branch network, there is no channel conflict between bank and brokers. Their pricing is very transparent, and every client is on an even playing field as far as pricing is concerned.

Macquarie is up there for us in the last 12 months. Like ING, there is no channel conflict, and its delivery model is geared to assist brokers to grow their business. It also helps that I have one of the best BDMs in the business, Sandro Furnari.

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

There is no conscious effort to either use majors or non-majors – it is about the service offering they provide my business, as I see this as an extension of the service proposition that I give to my clients.

Pricing-wise, they are very competitive as well, so my clients are not getting a lesser deal than what they would have received if I took them to a major.

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

Service and non-competing branch networks.

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

The only questions that clients pose to me with non-majors is the presence of branch networks, so maybe have a few strategic branches for clients to drop in to do some banking if they choose to.

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

Depending on the age of the client, the younger clients all do internet banking, so there is no issue with having the branch network, but some of my older clients still like the presence of the branch network where they can go in and do their banking or sort out issues.

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