As 2014 kicks into gear and the property market picks up where it left off last year, non-banks and mortgage managers are keen to increase their slice of the mortgage market. MPA speaks to some key players for their take on why you should give the non-bank sector a try
As 2014 kicks into gear and the property market picks up where it left off last year, non-banks and mortgage managers are keen to increase their slice of the mortgage market. MPA speaks to some key players for their take on why you should give the non-bank sector a try
With every year that passes, the GFC looks less mountainous in the rear-view mirror. But its effects have left quite an impression on the Australian lending sector, as well as the consumer psyche. However, the non-banks and mortgage managers that have weathered the financial storm have come out of the experience fighting fit, and are keener than ever to secure a larger slice of the mortgage market.
With record low interest rates predicted to be with us for some time, and buyers finally having come out of the woodwork last year, non-banks and mortgage managers are seriously staking their claim as valuable partners to the third-party mortgage origination channel.
To get a clearer understanding of the value proposition that the non-banks are presenting to brokers, MPA spoke to several of the sector’s big names to discover where their strengths lie.
A common theme brought up by our panel of non-bank and mortgage manager spokespersons was their organisations’ ability to provide solutions for clients whose circumstances may have left them out in the cold with the larger lenders.
Customer service, too, came up in conversation as something the non-bank sector takes extremely seriously. Giving brokers clear access to the decision-makers that they need to speak to certainly appears to be a priority.
Still unconvinced? The following pages will provide you with some food for thought, as we ask the tricky questions of our non-bank representatives and quiz them on the challenges they face, how they expect to perform, the opportunities they present to brokers, and how you can persuade your clients that non-banks and mortgage managers are worth considering.
What challenges do non-bank lenders face this year?
Mario Rehayem
The biggest challenge non-bank lenders face at present is articulating their point of difference to consumers. The point of differentiation needs to be relevant and achieve cut-through in a market receiving constant mixed messages. Following the GFC, non-banks can no longer differentiate easily on price or product features. Non-banks that are currently doing well have found new ways to differentiate, such as specialist lending capability, through better customer service, and by tailoring products for niche customer segments.
John Mohnacheff
As market conditions continue to improve, more non-banks will continue to try to restart their businesses. In the interim, industry dynamics have changed due to increasing regulation and a focus by all lenders on relationships. Therefore, it will be a challenge for non-banks to re-establish these relationships when many brokers tend to concentrate their non-bank activities on only a handful of companies. This challenge will be even greater for those non-banks that previously withdrew from the market during difficult times.
Daryl Hill
The biggest challenge for non-bank lenders continues to be to overcome people’s insistence on using a major bank, as generally they are the only finance brands they know and hear about in the media, and are likely to have banked with them all of their life.
However, there has been a steady increase in the use of non-bank lenders over the past five years, particularly as a result of the GFC when many of the country’s largest institutions tightened their loan acceptance criteria, leading to an increased footprint for the non-bank lending sector. The major banks and mortgage insurers are yet to relinquish their tight grip on credit criteria, therefore demand in this area has remained high and continues to grow.
How do you expect non-bank lenders to fare compared to the banks this year?
David White
The challenge is to remain competitive in a very competitive market and bring new products and rates to the market, which we have done successfully for the start of the year. Funding is no problem, which will allow non-banks to continue the resurgence and take back some market share. As non-bank lenders provide a strong alternative with good rates, I believe the growth will continue.
Peter Wood
Over the coming 12 months non-banks face an increased challenge to remain relevant to the third-party distribution network and maintain the advances which have been made in 2013. Bluestone is optimistic about the sector growth and corresponding market opportunities.
Greg Mitchell
The biggest challenge for non-bank lenders is to claw back market share lost immediately after the GFC. It is obviously well documented that a range of factors, such as the cost of funds and changes to policies, resulted in a decline in the share of volumes written by the non-bank sector.
In light of this, over the past three years Homeloans has aggressively explored areas of reversing this trend. And this had been achieved by reducing our ‘get in’ costs, reducing our interest rates, and providing a suite of products that are well featured and priced to be at the forefront of the market. We have also employed industry-leading BDMs and focused on maintaining our excellent levels of service to both brokers and customers.
Peter Wood
As a leading non-bank lender, Bluestone offers products which don’t fit major banks’ lending criteria and target smaller niches of the market where major lenders don’t compete. We expect considerable market growth in specialist lending as brokers realise the potential of broadening the depth of their customer base, increase referral sources and drive revenue growth through diversification.
Mario Rehayem
The non-bank segment will continue to grow this year due to their ability to offer home loan solutions to underserviced niches, and on the back of a superior customer service proposition. The nonbanks that deliver a consistently high level of service will continue to grow not just this year but for many years to come.
John Mohnacheff
Non-banks should outperform banks this year as non-banks mainly rely on the broker community and are therefore more responsive and attentive, which is why having relationships with non-banks remains important. Also, with the GFC now behind us, consumers are looking for and are open to alternatives. Liberty has benefited from these dynamics as we continue to offer one of the widest product ranges, flexible policies and an unmatched track record in the non-bank sector. We are confident that there is just no comparison.
Greg Mitchell
We have noticed a number of other non-bank lenders have stepped up their game in order to compete with the larger banks, provide a range of products, and be ‘relevant’ in what could be described as an ‘interesting’ environment. For Homeloans, we believe the increased aggression by the big banks puts us in a stronger position. Whilst the banks have a limited offering, Homeloans has a broader offering.
Daryl Hill
We expect to see a significant increase in volumes over the coming two years as more people become comfortable with non-bank alternatives, and other product initiatives unfold.
As generations of internet-savvy consumers who are more likely to pursue alternatives come through the finance system, we expect a larger portion of consumers will use a non-bank, where service is often more personal and products are tailored to meet their individual requirements.
La Trobe Financial does not credit score; instead we assess each application on its merits using a common-sense approach. The incoming reporting regime will actually drive more business our way until other ‘credit scoring’ organisations figure out how to handle the additional data that will be available.
What kinds of opportunities can non-banks offer to brokers at present?
David White
Non-banks provide a range of products with flexible credit policies which brokers can tap into and use these products to allow them to provide an option to each client, including those that don’t fit the standard credit policy of the banks. There are also a range of cheap fixed and variable rate options for brokers, with options for them to choose higher upfront or higher trail commission, providing real flexibility to the brokers.
Non-bank lenders can also tap into the online lending section of the market, which is growing rapidly as non-banks can provide the rates to compete with online lenders – this is a great opportunity for non-banks.
Peter Wood
The non-bank sector caters for a wide range of self-employed and PAYG borrowers who are unable to obtain mortgage finance from a traditional lender.
This includes those who have past or present credit issues which have occurred due to a speed bump in life (eg divorce, illness or loss of job). Many of our customers don’t have current up-to-date financials, mortgage arrears, and tax debt needing to be paid, to name a few. In addition to becoming an excellent referral source, if managed appropriately brokers have the opportunity to place the borrowers back with a major lender after a suitable period of time, thereby increasing their revenue.
Mario Rehayem
Due to their size, non-banks are able to offer a more personalised service through the whole mortgage process, and this is a key area for them to continue to outperform the banks. Another area that non-banks have an advantage in is the ability to find home loan solutions for borrowers who are declined by automated credit scoring, or who don’t neatly fit the credit model of the LMI insurers. This applies to the large number of small-business owners throughout Australia who often have seemingly complex business structures and find it difficult to fit into the commoditised major bank approach to mortgage finance.
John Mohnacheff
I can’t speak for other non-banks but we have continued to strengthen our value proposition to our business partners. For instance, we have recently made our products available through ApplyOnline. Combined with our personalised support, flexible criteria, innovative products and financial stability, we offer brokers the ability to satisfy a range of customers spanning prime and custom scenarios, and to expand into new products such as SMSF lending, motor finance or commercial mortgages.
Daryl Hill
The value-add when working with non-bank lenders is simply the ability to write more business as they cater for a wider market, which ultimately impacts positively on a broker’s bottom line.
Non-bank lenders give brokers access to a broader product range than the major banks generally provide. At La Trobe Financial we have one of the broadest product suites available in the market.
Greg Mitchell
In the case of Homeloans, we are able to offer solutions across most features and most scenarios – and it can be done with one simple application form. Credit advisers can now recommend Homeloans products to nearly all types of borrowers, from prime to non-conforming and from SMSF trustees to self-employed low-doc borrowers.
How can brokers go about persuading clients that non-banks are worth considering?
Greg Mitchell
It comes down to a number of factors: specialisation; longevity of the lender; competitive interest rates; flexible, innovative solutions; and support provided by the lender to both broker and borrower. These are all areas that Homeloans has focused on to create a strong value proposition for both brokers and their customers. Simply put, we pride ourselves on being home loan specialists, with a focus on providing outstanding service.
Daryl Hill
Brokers can assist by selling the solutions, service and capabilities that non-banks offer. Non-banks display a higher level of personalised service and work with consumers underserved by the traditional retail banks to find a suitable outcome to meet their needs, not just leaving them on the docks after failing the automated lending processes of retail banks due to minor (but often paid) impairments in credit criteria, alternate modes of income verification, older-than-usual accepted age, or past minor default history due to missed bills.
David White
It all comes down to the client’s needs. A broker will offer a range of products that suit the client’s needs, and the client can choose the right product for them. When comparing the products, the client will see that rate, fees and features of the product are similar and in some cases superior to the major banks. Brokers can promote non-banks, as products are fully featured and the service non-banks provide is generally superior to banks as there is a more personal approach to servicing the client.
Peter Wood
It is important that brokers understand the borrower’s needs and provide a solution that enables them to achieve their goals, which is particularly pertinent if the borrower fits outside the traditional lending criteria. This represents a substantial group, who for some time now have not been catered to, and as such improves brokers’ value proposition and enables access to an expanding market estimated to be worth $3–$5bn.
John Mohnacheff
Although it has been several years since the onset of the GFC, it did expose the vulnerabilities of some non-banks and highlighted that not all non-banks are alike. As clients now seek and consider alternatives available to them, it is important for brokers to protect their reputation by choosing their non-bank relationships wisely. Doing so will allow brokers to offer innovative solutions, flexibility and personalised service, enabled by non-banks like Liberty.
Mario Rehayem
By continuing to offer a superior customer service experience to borrowers. Nobody likes their home loan, but they remember the experience they had in obtaining their home loan, and the personalised service offered by non-banks is something they will not only remember for a long time but will share with their family and friends. Brokers can use this service experience previous clients experienced to persuade new clients to at least consider what a non-bank has to offer.
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IN FOCUS: PEPPER
Pepper
MPA: What’s your value proposition to brokers?
Mario Rehayem: Pepper is a truly independent one-stop mortgage provider that enables brokers to capitalise on more opportunities to find the right home loan for all their clients, not just those that neatly fit mainstream lending criteria.
MPA: What’s your standout product, and what are its features?
MR: Pepper’s success is not hinged on any one product. We service a large spectrum of different borrowers, from prime to those with a slightly impaired credit history, and we have a suite of products that meet their individual needs.
MPA: What are your plans for the year ahead?
MR: A key focus is to continue and expand upon the successful broker education program ‘Better Business’ that we launched in 2013, with the addition of new modules and the launch of a more broker-friendly portal. Pepper commits to continuing its long-standing tradition of listening to its brokers and challenging the status quo with regard to innovation and service standards.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
MR: Pepper has been successfully lending in the Australian market for 13 years, and was one of few non-bank lenders to not only survive but continue to lend through the GFC. Pepper is a global company with operations in the UK, Ireland, Spain and South Korea. We have very strong, successful and long-standing relationships with our funders, NAB, CBA and Westpac. This gives Pepper access to ample and diverse funding arrangements, which in turn generates confidence that Pepper is here for the long term.
IN FOCUS: LIBERTY FINANCIAL
John Mohnacheff
National sales manager
Liberty Financial
MPA: What’s your value proposition to brokers, and what’s your standout product?
John Mohnacheff: Liberty offers a diversified range of industry-leading home loans, commercial mortgages, SMSF loans and motor finance to a wide range of prime and custom customers. However, we believe our standout product is our relationship with our business partners. We understand that we are only as successful as our relationships, and Liberty is dedicated to supporting our business partners and their success. This is seen in our BDM team, flexible policies and direct access to credit assessors, for example. Liberty stands by our business partners in good times and bad, and can be relied upon to work hardest to find win-win outcomes for everyone.
MPA: What are your plans for the year ahead?
JM: We have some exciting initiatives that we will be announcing throughout the year. As Liberty has demonstrated since 1997, we will continue to offer timely solutions and unmatched support to our business partners.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
JM: Unlike some other non-banks that had to change their business models, cease originations or exit the industry altogether, Liberty has been able to offer our products and services without interruption since 1997. Liberty has been able to help almost 150,000 customers by advancing over $12bn in funds. Our proud history is only surpassed by our exciting future. We look forward to partnering with the broker industry to continue offering innovative solutions that help clients achieve their goals.
IN FOCUS: LA TROBE FINANCIAL
La Trobe Financial
MPA: What’s your value proposition to brokers, and what’s your standout product?
Daryl Hill: At La Trobe Financial we provide flexible solutions for brokers on the spot, as our experienced credit analysts and senior managers, client partnerships, all have credit approval mandates, and we provide brokers with direct access to our credit analysts. We also offer a very competitive commission structure with no clawback.
Our credit repair products are our most popular products largely due to our ‘life event’ risk grade methodology. Rather than count the number of, or size of, defaults and judgments, we look at the number of events, such as redundancy or divorce, which led to the impairments. We have recently launched an SMSF loan product and the response has been very welcoming.
MPA: What are your plans for the year ahead?
DH: We will be announcing more new products and further competitive improvements which will mean brokers will be logging on to our electronic loan closing system, making loan settlement faster and easier.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
DH: La Trobe Financial is one of Australia’s leading bank-independent, credit specialist fund managers, providing funding and investment solutions to a diverse range of customers since 1952. We have been a proven and trusted investment partner for institutional and retail investors alike, covering $10bn and 120,000 customers.
We have demonstrated our long-standing commitment to the third-party channel for over 60 years. Third-party originators account for 88% of our new business; brokers are our lifeblood, and we treat them as such.
IN FOCUS: AFM
AFM
MPA: What’s your value proposition to brokers, and what’s your standout product?
David White: Excellent service and the ability for a broker to talk to the directors at any time. It is hard to provide a standout product as we specialise in so many areas; however, recent changes to our Complete and Alliance Options, allowing the broker to choose the commission of either high upfront and lower trail or lower upfront and higher trail to suit their cash flow needs, offer an excellent option.
MPA: What are your plans for the year ahead?
DW: To continue our organic growth plans while we still work on new products to release to the market. A strong marketing campaign will commence this year, promoting our brand and products to brokers. We are just finalising our sponsorship of select aggregators and will continue to promote our services to the aggregators. An additional focus this year will be to provide funding to large broking firms for a white label program where the broker will be able to sell their brand with branded application forms, website access for consumers, and statements.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
DW: We have an open book with our brokers, and being 10 years old with a portfolio well over $2bn and no debt, with commissions paid on time every time, proves we are a sustainable business. Our main funding comes from bank balance sheets and not securitised lending, ensuring stability of rates for the customer – the strength of a bank without dealing with one.
IN FOCUS: BLUESTONE
Management, Australasia
MPA: Why has Bluestone decided to start issuing mortgages again?
Peter Wood: After extensive due diligence and discussion with a number of aggregation groups and brokers, we felt that the non-conforming market was not being served to its optimal potential and would directly benefit from broad solutions that extended the current product offering available.
MPA: What’s your value proposition to brokers, and what’s your standout product?
PW: Bluestone’s value proposition is to provide diverse, market-specific, well-priced, quality products combined with exceptional service levels. Bluestone’s flagship products targets borrowers who are self-employed/PAYG and/or have past or present credit defaults, judgments or mortgage arrears.
MPA: What are your plans for the year ahead?
PW: Having been number one in the market before, we have no doubt that Bluestone can become the market leader again. The outlook for the non-conforming market is positive. We have a high level of confidence and anticipate excellent growth as brokers become more familiar with the various products available and how this expands their offering (and corresponding client base).
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
PW: Bluestone is committed to the market long term. Our business model is established, sustainable and reflects extensive due diligence and collaboration with our business partners. The company offers flexible solutions via its range of quality, niche products. Tailoring specific solutions on a loan-by-loan basis is also key to attracting business. This is assisted by the depth and experience of our underwriters, who are not only accessible but are encouraged to adopt a flexible lateral-thinking approach to each case. Conformance, transparency and ease of process are core Bluestone principles.
IN FOCUS: HOMELOANS
Homeloans
MPA: What’s your value proposition to brokers, and what’s your standout product?
Greg Mitchell: Homeloans has a number of value propositions:
Homeloans provides a comprehensive array of products across both prime and non-prime markets, with options to suit all types of borrowers and features to suit individual needs. We certainly don’t take a ‘one size fits all’ approach. Our feature-packed Homeloans MoniPower loans are our bestsellers.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
Greg Mitchell: Homeloans has been operating for almost 30 years and in that time has gone from strength to strength. Being a publicly listed company demands high standards of integrity and compliance and a need to demonstrate good corporate governance and best-practice recommendations.
We also have a diverse funding base, which enables us to be agile and provide a wide range of products. And we don’t believe in a set-and-forget approach when it comes to our home loan solutions. We continually monitor the performance of all our products, and regularly survey brokers and borrowers to ensure we continuously innovate and adapt our processes and products to respond to market needs and requirements.
With every year that passes, the GFC looks less mountainous in the rear-view mirror. But its effects have left quite an impression on the Australian lending sector, as well as the consumer psyche. However, the non-banks and mortgage managers that have weathered the financial storm have come out of the experience fighting fit, and are keener than ever to secure a larger slice of the mortgage market.
With record low interest rates predicted to be with us for some time, and buyers finally having come out of the woodwork last year, non-banks and mortgage managers are seriously staking their claim as valuable partners to the third-party mortgage origination channel.
To get a clearer understanding of the value proposition that the non-banks are presenting to brokers, MPA spoke to several of the sector’s big names to discover where their strengths lie.
A common theme brought up by our panel of non-bank and mortgage manager spokespersons was their organisations’ ability to provide solutions for clients whose circumstances may have left them out in the cold with the larger lenders.
Customer service, too, came up in conversation as something the non-bank sector takes extremely seriously. Giving brokers clear access to the decision-makers that they need to speak to certainly appears to be a priority.
Still unconvinced? The following pages will provide you with some food for thought, as we ask the tricky questions of our non-bank representatives and quiz them on the challenges they face, how they expect to perform, the opportunities they present to brokers, and how you can persuade your clients that non-banks and mortgage managers are worth considering.
What challenges do non-bank lenders face this year?
Mario RehayemThe biggest challenge non-bank lenders face at present is articulating their point of difference to consumers. The point of differentiation needs to be relevant and achieve cut-through in a market receiving constant mixed messages. Following the GFC, non-banks can no longer differentiate easily on price or product features. Non-banks that are currently doing well have found new ways to differentiate, such as specialist lending capability, through better customer service, and by tailoring products for niche customer segments.
John MohnacheffAs market conditions continue to improve, more non-banks will continue to try to restart their businesses. In the interim, industry dynamics have changed due to increasing regulation and a focus by all lenders on relationships. Therefore, it will be a challenge for non-banks to re-establish these relationships when many brokers tend to concentrate their non-bank activities on only a handful of companies. This challenge will be even greater for those non-banks that previously withdrew from the market during difficult times.
Daryl HillThe biggest challenge for non-bank lenders continues to be to overcome people’s insistence on using a major bank, as generally they are the only finance brands they know and hear about in the media, and are likely to have banked with them all of their life.
However, there has been a steady increase in the use of non-bank lenders over the past five years, particularly as a result of the GFC when many of the country’s largest institutions tightened their loan acceptance criteria, leading to an increased footprint for the non-bank lending sector. The major banks and mortgage insurers are yet to relinquish their tight grip on credit criteria, therefore demand in this area has remained high and continues to grow.
How do you expect non-bank lenders to fare compared to the banks this year?
David WhiteThe challenge is to remain competitive in a very competitive market and bring new products and rates to the market, which we have done successfully for the start of the year. Funding is no problem, which will allow non-banks to continue the resurgence and take back some market share. As non-bank lenders provide a strong alternative with good rates, I believe the growth will continue.
Peter WoodOver the coming 12 months non-banks face an increased challenge to remain relevant to the third-party distribution network and maintain the advances which have been made in 2013. Bluestone is optimistic about the sector growth and corresponding market opportunities.
Greg MitchellThe biggest challenge for non-bank lenders is to claw back market share lost immediately after the GFC. It is obviously well documented that a range of factors, such as the cost of funds and changes to policies, resulted in a decline in the share of volumes written by the non-bank sector.
In light of this, over the past three years Homeloans has aggressively explored areas of reversing this trend. And this had been achieved by reducing our ‘get in’ costs, reducing our interest rates, and providing a suite of products that are well featured and priced to be at the forefront of the market. We have also employed industry-leading BDMs and focused on maintaining our excellent levels of service to both brokers and customers.
Peter Wood
As a leading non-bank lender, Bluestone offers products which don’t fit major banks’ lending criteria and target smaller niches of the market where major lenders don’t compete. We expect considerable market growth in specialist lending as brokers realise the potential of broadening the depth of their customer base, increase referral sources and drive revenue growth through diversification.
Mario Rehayem
The non-bank segment will continue to grow this year due to their ability to offer home loan solutions to underserviced niches, and on the back of a superior customer service proposition. The nonbanks that deliver a consistently high level of service will continue to grow not just this year but for many years to come.
John Mohnacheff
Non-banks should outperform banks this year as non-banks mainly rely on the broker community and are therefore more responsive and attentive, which is why having relationships with non-banks remains important. Also, with the GFC now behind us, consumers are looking for and are open to alternatives. Liberty has benefited from these dynamics as we continue to offer one of the widest product ranges, flexible policies and an unmatched track record in the non-bank sector. We are confident that there is just no comparison.
Greg Mitchell
We have noticed a number of other non-bank lenders have stepped up their game in order to compete with the larger banks, provide a range of products, and be ‘relevant’ in what could be described as an ‘interesting’ environment. For Homeloans, we believe the increased aggression by the big banks puts us in a stronger position. Whilst the banks have a limited offering, Homeloans has a broader offering.
Daryl Hill
We expect to see a significant increase in volumes over the coming two years as more people become comfortable with non-bank alternatives, and other product initiatives unfold.
As generations of internet-savvy consumers who are more likely to pursue alternatives come through the finance system, we expect a larger portion of consumers will use a non-bank, where service is often more personal and products are tailored to meet their individual requirements.
La Trobe Financial does not credit score; instead we assess each application on its merits using a common-sense approach. The incoming reporting regime will actually drive more business our way until other ‘credit scoring’ organisations figure out how to handle the additional data that will be available.
What kinds of opportunities can non-banks offer to brokers at present?
David White
Non-banks provide a range of products with flexible credit policies which brokers can tap into and use these products to allow them to provide an option to each client, including those that don’t fit the standard credit policy of the banks. There are also a range of cheap fixed and variable rate options for brokers, with options for them to choose higher upfront or higher trail commission, providing real flexibility to the brokers.
Non-bank lenders can also tap into the online lending section of the market, which is growing rapidly as non-banks can provide the rates to compete with online lenders – this is a great opportunity for non-banks.
Peter Wood
The non-bank sector caters for a wide range of self-employed and PAYG borrowers who are unable to obtain mortgage finance from a traditional lender.
This includes those who have past or present credit issues which have occurred due to a speed bump in life (eg divorce, illness or loss of job). Many of our customers don’t have current up-to-date financials, mortgage arrears, and tax debt needing to be paid, to name a few. In addition to becoming an excellent referral source, if managed appropriately brokers have the opportunity to place the borrowers back with a major lender after a suitable period of time, thereby increasing their revenue.
Mario Rehayem
Due to their size, non-banks are able to offer a more personalised service through the whole mortgage process, and this is a key area for them to continue to outperform the banks. Another area that non-banks have an advantage in is the ability to find home loan solutions for borrowers who are declined by automated credit scoring, or who don’t neatly fit the credit model of the LMI insurers. This applies to the large number of small-business owners throughout Australia who often have seemingly complex business structures and find it difficult to fit into the commoditised major bank approach to mortgage finance.
John Mohnacheff
I can’t speak for other non-banks but we have continued to strengthen our value proposition to our business partners. For instance, we have recently made our products available through ApplyOnline. Combined with our personalised support, flexible criteria, innovative products and financial stability, we offer brokers the ability to satisfy a range of customers spanning prime and custom scenarios, and to expand into new products such as SMSF lending, motor finance or commercial mortgages.
Daryl Hill
The value-add when working with non-bank lenders is simply the ability to write more business as they cater for a wider market, which ultimately impacts positively on a broker’s bottom line.
Non-bank lenders give brokers access to a broader product range than the major banks generally provide. At La Trobe Financial we have one of the broadest product suites available in the market.
Greg Mitchell
In the case of Homeloans, we are able to offer solutions across most features and most scenarios – and it can be done with one simple application form. Credit advisers can now recommend Homeloans products to nearly all types of borrowers, from prime to non-conforming and from SMSF trustees to self-employed low-doc borrowers.
How can brokers go about persuading clients that non-banks are worth considering?
Greg Mitchell
It comes down to a number of factors: specialisation; longevity of the lender; competitive interest rates; flexible, innovative solutions; and support provided by the lender to both broker and borrower. These are all areas that Homeloans has focused on to create a strong value proposition for both brokers and their customers. Simply put, we pride ourselves on being home loan specialists, with a focus on providing outstanding service.
Daryl Hill
Brokers can assist by selling the solutions, service and capabilities that non-banks offer. Non-banks display a higher level of personalised service and work with consumers underserved by the traditional retail banks to find a suitable outcome to meet their needs, not just leaving them on the docks after failing the automated lending processes of retail banks due to minor (but often paid) impairments in credit criteria, alternate modes of income verification, older-than-usual accepted age, or past minor default history due to missed bills.
David White
It all comes down to the client’s needs. A broker will offer a range of products that suit the client’s needs, and the client can choose the right product for them. When comparing the products, the client will see that rate, fees and features of the product are similar and in some cases superior to the major banks. Brokers can promote non-banks, as products are fully featured and the service non-banks provide is generally superior to banks as there is a more personal approach to servicing the client.
Peter Wood
It is important that brokers understand the borrower’s needs and provide a solution that enables them to achieve their goals, which is particularly pertinent if the borrower fits outside the traditional lending criteria. This represents a substantial group, who for some time now have not been catered to, and as such improves brokers’ value proposition and enables access to an expanding market estimated to be worth $3–$5bn.
John Mohnacheff
Although it has been several years since the onset of the GFC, it did expose the vulnerabilities of some non-banks and highlighted that not all non-banks are alike. As clients now seek and consider alternatives available to them, it is important for brokers to protect their reputation by choosing their non-bank relationships wisely. Doing so will allow brokers to offer innovative solutions, flexibility and personalised service, enabled by non-banks like Liberty.
Mario Rehayem
By continuing to offer a superior customer service experience to borrowers. Nobody likes their home loan, but they remember the experience they had in obtaining their home loan, and the personalised service offered by non-banks is something they will not only remember for a long time but will share with their family and friends. Brokers can use this service experience previous clients experienced to persuade new clients to at least consider what a non-bank has to offer.
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IN FOCUS: PEPPER
Mario Rehayem
Director of sales and distributionPepper
MPA: What’s your value proposition to brokers?
Mario Rehayem: Pepper is a truly independent one-stop mortgage provider that enables brokers to capitalise on more opportunities to find the right home loan for all their clients, not just those that neatly fit mainstream lending criteria.
MPA: What’s your standout product, and what are its features?
MR: Pepper’s success is not hinged on any one product. We service a large spectrum of different borrowers, from prime to those with a slightly impaired credit history, and we have a suite of products that meet their individual needs.
MPA: What are your plans for the year ahead?
MR: A key focus is to continue and expand upon the successful broker education program ‘Better Business’ that we launched in 2013, with the addition of new modules and the launch of a more broker-friendly portal. Pepper commits to continuing its long-standing tradition of listening to its brokers and challenging the status quo with regard to innovation and service standards.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
MR: Pepper has been successfully lending in the Australian market for 13 years, and was one of few non-bank lenders to not only survive but continue to lend through the GFC. Pepper is a global company with operations in the UK, Ireland, Spain and South Korea. We have very strong, successful and long-standing relationships with our funders, NAB, CBA and Westpac. This gives Pepper access to ample and diverse funding arrangements, which in turn generates confidence that Pepper is here for the long term.
IN FOCUS: LIBERTY FINANCIAL
John Mohnacheff
National sales manager
Liberty Financial
MPA: What’s your value proposition to brokers, and what’s your standout product?
John Mohnacheff: Liberty offers a diversified range of industry-leading home loans, commercial mortgages, SMSF loans and motor finance to a wide range of prime and custom customers. However, we believe our standout product is our relationship with our business partners. We understand that we are only as successful as our relationships, and Liberty is dedicated to supporting our business partners and their success. This is seen in our BDM team, flexible policies and direct access to credit assessors, for example. Liberty stands by our business partners in good times and bad, and can be relied upon to work hardest to find win-win outcomes for everyone.
MPA: What are your plans for the year ahead?
JM: We have some exciting initiatives that we will be announcing throughout the year. As Liberty has demonstrated since 1997, we will continue to offer timely solutions and unmatched support to our business partners.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
JM: Unlike some other non-banks that had to change their business models, cease originations or exit the industry altogether, Liberty has been able to offer our products and services without interruption since 1997. Liberty has been able to help almost 150,000 customers by advancing over $12bn in funds. Our proud history is only surpassed by our exciting future. We look forward to partnering with the broker industry to continue offering innovative solutions that help clients achieve their goals.
IN FOCUS: LA TROBE FINANCIAL
Daryl Hill
Vice president, head of major clients, La Trobe Financial
MPA: What’s your value proposition to brokers, and what’s your standout product?
Daryl Hill: At La Trobe Financial we provide flexible solutions for brokers on the spot, as our experienced credit analysts and senior managers, client partnerships, all have credit approval mandates, and we provide brokers with direct access to our credit analysts. We also offer a very competitive commission structure with no clawback.
Our credit repair products are our most popular products largely due to our ‘life event’ risk grade methodology. Rather than count the number of, or size of, defaults and judgments, we look at the number of events, such as redundancy or divorce, which led to the impairments. We have recently launched an SMSF loan product and the response has been very welcoming.
MPA: What are your plans for the year ahead?
DH: We will be announcing more new products and further competitive improvements which will mean brokers will be logging on to our electronic loan closing system, making loan settlement faster and easier.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
DH: La Trobe Financial is one of Australia’s leading bank-independent, credit specialist fund managers, providing funding and investment solutions to a diverse range of customers since 1952. We have been a proven and trusted investment partner for institutional and retail investors alike, covering $10bn and 120,000 customers.
We have demonstrated our long-standing commitment to the third-party channel for over 60 years. Third-party originators account for 88% of our new business; brokers are our lifeblood, and we treat them as such.
IN FOCUS: AFM
David White
Managing director,AFM
MPA: What’s your value proposition to brokers, and what’s your standout product?
David White: Excellent service and the ability for a broker to talk to the directors at any time. It is hard to provide a standout product as we specialise in so many areas; however, recent changes to our Complete and Alliance Options, allowing the broker to choose the commission of either high upfront and lower trail or lower upfront and higher trail to suit their cash flow needs, offer an excellent option.
MPA: What are your plans for the year ahead?
DW: To continue our organic growth plans while we still work on new products to release to the market. A strong marketing campaign will commence this year, promoting our brand and products to brokers. We are just finalising our sponsorship of select aggregators and will continue to promote our services to the aggregators. An additional focus this year will be to provide funding to large broking firms for a white label program where the broker will be able to sell their brand with branded application forms, website access for consumers, and statements.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
DW: We have an open book with our brokers, and being 10 years old with a portfolio well over $2bn and no debt, with commissions paid on time every time, proves we are a sustainable business. Our main funding comes from bank balance sheets and not securitised lending, ensuring stability of rates for the customer – the strength of a bank without dealing with one.
IN FOCUS: BLUESTONE
Peter Wood
General manager, Bluestone AssetManagement, Australasia
MPA: Why has Bluestone decided to start issuing mortgages again?
Peter Wood: After extensive due diligence and discussion with a number of aggregation groups and brokers, we felt that the non-conforming market was not being served to its optimal potential and would directly benefit from broad solutions that extended the current product offering available.
MPA: What’s your value proposition to brokers, and what’s your standout product?
PW: Bluestone’s value proposition is to provide diverse, market-specific, well-priced, quality products combined with exceptional service levels. Bluestone’s flagship products targets borrowers who are self-employed/PAYG and/or have past or present credit defaults, judgments or mortgage arrears.
MPA: What are your plans for the year ahead?
PW: Having been number one in the market before, we have no doubt that Bluestone can become the market leader again. The outlook for the non-conforming market is positive. We have a high level of confidence and anticipate excellent growth as brokers become more familiar with the various products available and how this expands their offering (and corresponding client base).
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
PW: Bluestone is committed to the market long term. Our business model is established, sustainable and reflects extensive due diligence and collaboration with our business partners. The company offers flexible solutions via its range of quality, niche products. Tailoring specific solutions on a loan-by-loan basis is also key to attracting business. This is assisted by the depth and experience of our underwriters, who are not only accessible but are encouraged to adopt a flexible lateral-thinking approach to each case. Conformance, transparency and ease of process are core Bluestone principles.
IN FOCUS: HOMELOANS
Greg Mitchell
General manager, sales,Homeloans
MPA: What’s your value proposition to brokers, and what’s your standout product?
Greg Mitchell: Homeloans has a number of value propositions:
- Home loan specialists
Unlike banks, we are home loan specialists, with a focus on providing outstanding service to customers and brokers.
- Longevity and stability
Homeloans was established almost 30 years ago and is listed on the ASX.
- Australia-wide presence
We have representation in every state of Australia, with dedicated credit assessors and BDMs.
- Customer-service-focused approach
- Innovation
Homeloans continuously seeks to enhance the credit adviser and customer experience with innovative products.
- Low, competitive interest rates
Homeloans provides a comprehensive array of products across both prime and non-prime markets, with options to suit all types of borrowers and features to suit individual needs. We certainly don’t take a ‘one size fits all’ approach. Our feature-packed Homeloans MoniPower loans are our bestsellers.
MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?
Greg Mitchell: Homeloans has been operating for almost 30 years and in that time has gone from strength to strength. Being a publicly listed company demands high standards of integrity and compliance and a need to demonstrate good corporate governance and best-practice recommendations.
We also have a diverse funding base, which enables us to be agile and provide a wide range of products. And we don’t believe in a set-and-forget approach when it comes to our home loan solutions. We continually monitor the performance of all our products, and regularly survey brokers and borrowers to ensure we continuously innovate and adapt our processes and products to respond to market needs and requirements.
