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Brokers who ignore borrowers with non-standard income are missing out on their share of a growing segment of the lending market, according to the non-bank lender.
Brokers who automatically place borrowers with non-standard income in the ‘too-hard basket’ may be letting business walk by their doors, according to Tony MacRae, chief commercial officer of Bluestone Home Loans.
Speaking on The Adviser’s In Focus podcast, MacRae said it was becoming increasingly difficult for borrowers with non-traditional income streams, such as the self-employed, to secure finance through mainstream lenders.
“[Q]uite frankly, the banks make it either too complex or they expect to see those textbook income statements or textbook tax returns,” MacRae said, while highlighting that more borrowers are falling outside the strict rules typically applied by the traditional lenders.
“Whether it be customers changing the way they work, the way they earn, the amount of income streams they have or the fluctuation of those income streams, or even just the pressures that people are under, more customers are dropping outside that traditional lending landscape.
“More and more customers [are falling] into these circumstances. As we move to the new norm, post the pandemic [and with an] uncertain global economic environment, tariff wars and the like, more and more customers will fall into different ways of earning income.
“They will turn hobbies into careers and they’re going to need lending that allows them alternative ways to demonstrate their income.”
Against this backdrop, MacRae said specialist lenders, such as Bluestone Home Loans, “fill a gap in the market” and help brokers service “customers they may have thought were a little bit too hard”.
“It’s interesting. I’ve been in this role in the specialist lending space for about 19 months now, and I think the most common thing that I’ve heard after going out with BDMs and talking to brokers is a broker going: ‘I’ve been letting business walk by my door’,” MacRae said.
“Once it’s explained to them; once the opportunity is presented, [brokers are] absolutely open to writing this style of business.
“But I think the key is making it known that there are alternatives. There are options and solutions for brokers to write more customers.”
Part of the challenge of servicing this segment is being aware of the solutions that are available, MacRae said, and finding a way to cater for customers who have found themselves in financial difficulty due to cost-of-living challenges.
“No one issue should lock you out of home ownership or access to finance for a lifetime,” MacRae said.
“And so lenders such as ourselves, being able to provide those solutions to brokers is a great opportunity because it is a growing market.
“We think it’s about 20 per cent of the market, but it’s definitely growing as circumstances are presenting themselves today.”
Specialist solutions
Self-employed borrowers have been an area of focus in the non-bank space for years, with lenders such as Pepper Money, RedZed, and Resimac all investing heavily to grow this segment.
In October 2024, major bank Commonwealth Bank of Australia (CBA) also announced it had “broadened” its self-employed policy, joining similar moves from non-majors ING and Great Southern Bank.
“It’s about understanding the circumstance and recognising that not everything fits into a nice little box,” MacRae said.
“The circumstances may be just a little bit different. So, I think that’s the first myth that really needs to be dispelled. The second one is that there is a solution and an answer for most customers. [But that means] delving in and being open minded and telling the full story.”
Listen to the full episode of In Focus: How brokers can benefit from a specialist approach below:
Click here to listen on your device
[Related: Bluestone Home Loans celebrates 25 years]
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