Brighten Home Loans’ 2024 borrower survey revealed that 61% of prospective home buyers in the next five years are considering loans from non-bank lenders.
The trend is supported by recent ABS data showing non-bank lenders’ share in the residential home loan market has more than doubled, increasing from 5% to 11%.
The survey identified several factors influencing borrowers’ decisions to consider non-bank lenders: competitive interest rates (63.7%), appropriate eligibility requirements (50.7%), broker advice (45.2%), faster application processing times (29.9%), and good customer service (24.8%).
“It’s good to see that broker advice is one of the leading reasons customers consider non-banks for their property purchase,” said Chris Meaker (pictured above), Brighten’s head of sales. “This means that brokers are presenting customers with a range of options and empowering them with choice.”
The survey also showed that 65.7% of borrowers planning to buy a home in the next five years are likely to use a mortgage broker rather than engage in self-directed borrowing. Meaker noted that this figure, while lower than the latest MFAA market share of 74.1%, aligns with the typical borrower journey.
“Borrowers often start their mortgage journey thinking they can do it alone,” he said. “However, when they begin comparing products and applying for loans, the wheels can come off, and they then turn to a broker for advice. This really underscores the importance of the consumer-education role that brokers play.”
Despite the growing preference for non-bank lenders, more than half (57.5%) of the 39% of prospective borrowers only considering banks said they felt banks were a “safer” option. Meaker stressed the importance of educating borrowers about the safety and regulation of non-bank lenders.
“Non-bank lenders comply with the National Consumer Credit Protection Act (NCCP) just as banks do and are regulated by ASIC,” he said. “Additionally, non-banks are required to have a credit licence and meet the requirements of Australian consumer and privacy law. These regulations and requirements ensure that non-bank lenders are a safe option for borrowers in Australia.”
Meaker concluded by highlighting the role of education in empowering underserved segments of the mortgage market.
“If the mortgage industry — lenders and brokers alike — continues to empower borrowers, there is no reason why we won’t see non-bank market share climb higher in the next few years, making home loans more accessible to a wider group of Australians with diverse financial needs,” Meaker said.
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