Non banks closing the gap
Abolition of exit fees a great opportunity, says Homeloans
The credibility of non bank lenders continues to grow stronger amongst the mortgage broking community – but there’s still great potential to wrest power from the major banks, according to Homeloans Ltd. The comments come in light of the latest online broker survey conducted by Homeloans, which showed that only 13 per cent of mortgage brokers still perceive non banks as being the most suitable avenue for customers with a poor credit profile. This is a seven per cent drop compared to the same research conducted six months ago.
“Non bank – or alternative lenders – are no longer being perceived only as lenders of last resort or for those with poor credit histories,” says Tony Carn, Homeloans’ general manager third party distribution. “Brokers are now more open to recommending non banks. Almost half (49 per cent) of brokers said they wouldn’t find it difficult to recommend a home loan provider to a client who wasn’t familiar with that provider. That compares with 40 per cent in August last year.”
But there’s still great potential to further close the large gap between the non banks and the majors, Carn adds.
“Brokers are now even more willing to use a non bank, but there’s still a lot of opportunity for them to put this into action – and I believe the abolition of exit fees will provide a good springboard,” he says. “Currently, for many brokers exit fees are a psychological barrier and they won’t refer loans with such fees. Well from July 1 this will no longer be a credible barrier.”
Non banks also continue to resonate with borrowers, separate Homeloans’ research has found. Consumers’ dislike of the major banks continues to grow and they are more willing to look at products being offered by alternative lenders.
Of both investors and owner occupiers (non first home buyers), 73 per cent of respondents were open to using alternative lenders, whilst 69 per cent of first home buyers said they would consider a non bank / alternative lenders.
“We’re certainly seeing evidence of that at Homeloans. We’ve seen a 53 per cent increase in national awareness since August 2010,” Carn says.
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