Despite a recent wave of innovation across the lending landscape, brokers are calling on lenders to address critical “missing links” in product suites and policies that are currently hindering client outcomes.
As credit advisers speaking to borrowers each and every day, mortgage and finance brokers are at the frontline when it comes to identifying lender and product opportunities.
As heard on the Elite Broker and New Broker podcasts (available on The Adviser Podcast Network via Apple Podcasts, Spotify, and YouTube), brokers are reporting that while lenders are moving in the right direction, significant gaps remain.
Here, we unpack the products and policies brokers would like to see from lenders.
Rethinking the line of credit
For commercial and residential clients alike, the utility of a line of credit is often hamstrung by its cost. Matt Erwin of Cashman Consulting, noted that current pricing models and inflexible policies often deter borrowers who would otherwise benefit from the facility.
“I’d like to see is a more flexible line of credit. Often they are secured by a guarantee and a line of credit agreement, but they’re a little bit in the expensive range for some clients. That means they tend to not borrow at that range, which is disappointing,” the cash flow specialist said.
He suggested that a shift in how these products are secured could be the key to unlocking better rates.
“I’d like to be able to see lenders put a general security agreement, or a company security on it, which might lower the rate by de-risking (or mitigating some of the risk) in that product. Also, sometimes clients need a slightly bigger line of credit. So I’d like to see the lenders stretch themselves a little bit on that,” Erwin said.
Asset finance: The IO and invoice hurdle
In the asset finance space, the demand for cash flow preservation is driving calls for interest-only (IO) periods – a feature common in property, but rare in equipment lending.
Nicole Taylor from Medifund and Loan Market’s first dedicated asset finance franchise (Loan Market Nicole Taylor & Kylie Rapson) said that IO options for major equipment could be a game changer for growing enterprises.
“Interest-only loans for asset finance, especially on bigger equipment. Similar to an investment property, you want to keep those repayments down in the beginning. So if you’ve got an income-generating asset and you’re only just starting to use that asset within your business, or you’re a new business, you might want to build that cash flow up first. So interest-only asset would be an amazing product in the industry,” Taylor said.
Beyond product structure, the asset finance broker highlighted a procedural friction point: the reliance on dealership invoices for car loan settlements.
“I’d also like to see a car loan settlement without an invoice. A big bugbear in our industry is dealerships playing funny games with invoices at the last minute, which creates a poor experience for the client. I worked closely with Angle Finance on a pilot of this last year, where there were no invoices on delivery and, instead, they collect them three days after. So effectively we’re signing up the client, we’re paying down, we’re paying the dealer, and then we’re getting the invoice,” Taylor said.
Better supporting the ‘gig economy’
While products are one side of the coin, credit policy – particularly regarding employment – is where many brokers feel lenders are falling behind the modern workforce. Adam Donald of Capita Finance pointed to the specific challenges faced by Western Australia and Queensland’s fly-in fly-out (FIFO) workforces.
“I would like to see policy changes. FIFO is a huge thing over here in WA and in Queensland. Casual and FIFO workers are trying to make ends meet by going from job to job/casual-to-casual shutdowns. But a lot of banks don’t have a solution for that. Or, if they do, it’s limited,” Donald explained.
He called for a return to more lenient tenure requirements to support high-income earners in non-traditional roles.
“CBA used to have three-month casual period, now it’s six; I’d love that to go back down to three. I just think there’s a lot of opportunity for these customers, who are just doing the job that they can do and making great money – to be able to get in homes. Each bank has their niche, but if banks in particular were able to change certain policies, there’d be a lot more flexibility for people being able to get in,” Donald explained.
Addressing broker clawbacks
Finally, the perennial issue of clawbacks remains a point of contention, particularly when the reasons for a loan discharge are beyond the brokers’ (or the clients’) control. Ali Mehboob of Noor Finance urged for a more compassionate approach to remuneration.
“I’d like to see a more sympathetic clawback policy; particularly if the reason for coming out of the loan is out of the clients’ hands. For example, I recently got my first clawback. It was a scenario where the client’s wife lost her job, so they could not afford an investment property, so they sold the property,” the Sydney-based broker said.
“I would like to have these changes so if there is a marriage breakdown or property sold in a scenario like this, that industry can be a bit more sympathetic. I think it’s probably the only industry where it can be clawed back for the work that you’ve done. And these clawbacks make it difficult for brokers to manage cash flow.”
What is the “unicorn” product or policy you’re still waiting for? Are there gaps in your niche that lenders are ignoring? Let us know your thoughts and suggestions in the comments below or email us at
