APRA’s sabre-rattling about investment lending has certainly had its desired effect on banks. Lenders have pulled back significantly on their investment lending, with some raising rates and lowering LVRs and some pulling out of the market altogether. But while the warnings over investment lending may have been greeted with gloom and doom by banks,
Liberty national sales manager John Mohnacheff said non-banks have been its beneficiaries.
“APRA was certainly very kind to us. It is wonderful for non-banks,” he said.
And the boon to non-banks hasn’t just come in the form of increased investor activity, Mohnacheff said.
“The interesting thing about it though is that it’s made a lot of brokers consider doing business outside the big four, and though we’ve seen an increase in activity on the investor side, it hasn’t been all investors,” he said.
As brokers seek a new home for investment clients, Mohnacheff said non-banks are moving to front-of-mind for a broad array of consumers.
“I think brokers are starting to say, ‘There’s an opportunity out there for me to explore alternative lenders’. We’re getting a wonderful spread of business. We’re getting a flow-on of good prime business, and a lot more custom business flowing from that as well,” Mohnacheff said. “Brokers that have never used us in years are suddenly going, ‘Liberty? Why not?’ We’re no longer being perceived as a lender of last resort.”
The non-bank has also seen a windfall from the recent MPA Brokers on Non-bank survey, Mohnacheff said. Liberty topped the list of non-banks recommended by brokers, and Mohnacheff said the award has given the lender reputational capital in the third-party space.
“That has helped create the picture that Liberty is a good alternative to the majors.”#pb#
Moving beyond mortgages
Mohnacheff said one of the lender’s goals was to help brokers look beyond residential mortgages for revenue streams.
“When we look across our structure, we play in four very distinct areas: residential mortgages, the motor vehicle finance space, the commercial space and, sitting across residential and commercial, our real strength in
SMSF lending. So we’ve got this wonderful plethora of products that we can bring to the market,” he said. “We’re working very heavily with the broker space to make them aware that we’re not just here to do a mortgage, but that we can help their customer with car loans, with commercial loans, with
SMSF lending and we’ve got a few more tricky products up our sleeve that will be coming out as well. It will be a broad finance offering to the broker market. That sparks their attention.”
The key to helping brokers make the transition, Mohnacheff suggested, is education.
“We’ve got nearly 40 BDMs across Australia. We have residential mortgage BDMs, commercial BDMs, motor finance BDMs. Brokers may believe that these are difficult things to do, but we’re educating brokers that the one thing all these areas have in common is that you’re lending money. Brokers are finance specialists. They’re not just home loan specialists. And that creates a broader relevance of brokers to the consumer market. It’s not just a one-trick shop. It’s almost a department store of finance. All that changes is the asset. The fundamentals of lending do not change,” he said.
One thing that does change, however, is the way people interact with the home loan process. This means brokers need to pay attention to technological innovation, Mohnacheff said.
“I think brokers should also embrace technology and all the innovation that will be coming from smart, niche non-bank lenders that can provide products and access to data quickly through mobile networks,” he said.
“I really want brokers to think, ‘Am I playing in the technological age?’ If you’re not, embrace it because more and more stuff will be coming to you to give to your customers. It’s the future. And watch this space because there’s a lot more funky stuff coming.”
