Three Australian mortgage brokers have shared their experiences with non-bank lenders as part of a campaign with Pepper Money.
Non-bank lending in Australia has grown rapidly since 2015, driven mostly by mortgage lending where growth has averaged almost 15% on a six-month annualised basis, according to recent RBA data – more than twice the rate recorded by banks.
With costs continuing to rise and PEXA data revealing that 800,000 borrowers will transition from low-interest fixed rates this year, non-banks emerge as an alternative offering flexibility to brokers who are unable to meet their clients' needs through traditional lenders.
Kimberly Linder (pictured above left), director at Sydney-based finance and mortgage brokerage XCEL Finance, described non-bank lenders as “potentially a solution”.
“Their policies are a lot more flexible, and they are more prepared to look outside the box rather than tick a box, which is really what mainstream banking is,” Linder said.
While non-banks still only account for 5% of total lending, the RBA expects the industry to grow as more focus is turned to niche areas of the market that may otherwise would be overlooked by the banks.
George Massouridis (pictured above centre), founder and chief executive officer of Mortgage Navigators, said traditional banks have a tendency to “pigeon-hole clients” and if it doesn’t fit a particular model “they can’t assist”.
Massouridis, who recently raised over $10,000 for Vinnies CEO Sleepout, mentioned that he has been able to assist more clients due to the availability of non-bank lenders. In previous years, they were unable to access the appropriate financial products.
“When we thought the deal wasn’t a deal, Pepper was able to say, ‘Well, by the way, you missed this particular point and this is how we can help you,’” he said.
“It’s [an] extremely important thing for us to catch these missed opportunities that we otherwise wouldn’t have.”
Jessica Rix (pictured above right), a broker at Mortgage Choice in the regional town Mildura, Victoria, agreed saying when she did her first non-conforming loan she thought, “Wow, this is me to a tee”.
“I’m like someone who will fight for a deal and try and figure out a way to make it work for the customer. So, when I discovered the non-conforming space, I’m like wow, I’m totally going to love this part of brokerage, and I have, I’ve really enjoyed it,” she said.
“I went through the accreditation process when I came in and I really wanted to have a good list of non-conforming lenders because it was something I was really interested in. I wanted to be able to help a broader range of people – that’s why you become a broker.”
While the comments come as part of Pepper Money’s campaign Bank Said No? campaign, the non-bank lender said the stories are unscripted, real-life broker stories that are true to the industry.
Barry Saoud, Pepper Money’s general manager for mortgages and commercial lending, said the campaign hopes to celebrate the “incredibly important work brokers do” when they assist their clients with a non-bank solution.
“Ultimately, in our world, brokers are the bridge that connects customers to the opportunities and options that enable their dreams to become a reality,” said Saoud.
“What we hope to achieve with this campaign is an instant association: when the bank says no, give it the non-bank test. Talk to Pepper Money. We offer a diverse range of options across a lifetime of changing circumstances. If we can find a way to help, we will.”
Pepper Money said the campaign was born from the identification of gaps in financial inclusion where 60% Australians who enquire about a home loan don’t go on to obtain one.
“This tells us that people are likely to be missing out. And in this market, when people are under enormous stress, having options to offer your clients can make a real difference,” Saoud said.
