The Finance Brokers Association of Australia (FBAA) has welcomed the announcement by non-bank lender Bluestone to reduce its clawback period.
FBAA managing director Peter White AM (pictured above left) calls on all other lenders to follow.
Last week, Bluestone, a non-standard home loan lender, reduced the clawback period from 18 to six months on Prime Alt Doc home loan applications settled in August.
Tony MacRae (pictured above right), chief commercial officer at Bluestone, said this would deliver “greater income certainty” when submitting deals for borrowers in this cohort.
The announcement follows the non-standard lender cutting clawbacks by the same timeframe to its near prime and specialist home loan products in April this year.
Clawbacks have been a major point of frustration for brokers across the industry, with some likening it to a form of modern slavery.
A prominent advocate against the measure, White said clawbacks periods across the board should all be considerably less than 18 months.
For reference, Australia’s largest lender Commonwealth Bank (CBA) adjusted its clawback policy last year to 24 months.
Westpac now applies a 50% clawback for loans discharged within 12 to 18 months (previously 12–24 months) and doesn't have clawbacks for loans closed after 18 months.
ANZ has a 50% clawback applied between 12-15 months and a 25% clawback between 15-18 months.
NAB still maintains its 50% clawback for loans that refinance between 12 and 24 months after settlement.
“The FBAA has led the way in campaigning against the current unfair clawbacks and we continue to talk to lenders and government about this,” White said.
This animosity against clawbacks has led some lenders to adjust these anti-churn policies to appeal more to third-party brokers.
Self-employed home loan specialist Rate Money announced a new product line last year, which has no fees for borrowers and no clawbacks for brokers while Pepper Money, FinSecure, and Mortgage Ezy have also previously cut clawbacks in the past.
In this case, White said Bluestone has recognised that in this competitive market, they need to stand out.
“My message to lenders is that being fair to the broking channel by reducing clawbacks will not only make you stand out, but will surely generate business for you,” White said.
“Finance and mortgage brokers will always put the best interests of the customer first because not only are we legally obliged to, but we want to ensure that our customers continue to use and trust our industry.”
“But in this competitive market, if two products are identical, the one with the lesser clawback period will definitely be noticed.”
For their part, MacRae said in April that while there has been much debate in the industry around the fairness of clawbacks, it made sense to reduce the at-risk period.
“We encourage brokers to explore non-standard lending as a means to grow their businesses.”
