After a financial year which showed huge growth in loans, a state government-backed lender has explained how investing in the broker channel has helped.
HomeStart saw loans coming through from brokers grow to 60% of loans settled. The lender is backed by the South Australian government and offers lower deposits to help borrowers buy a home.
The non-bank is the first to say its products are not meant for the long term, but merely as a stepping stone to get into the property where they can refinance later down the track.
In the last financial year 90% of borrowers who came to HomeStart were unable to get finance through a mainstream lender.
The group is proud of its growth in broker-originated loans as it has worked hard to ensure the channel understands who can come to the lender and for what loans.
CEO of HomeStart John Oliver said, “I think what we’ve done is invest heavily in a number of things. We’ve got three dedicated business development specialists who are out there all the time talking to the brokers.
“We also focus a lot on new brokers coming into the industry. We run a number of professional development days during the year. Newer brokers come to that, so it gives an opportunity to spend time with them and invest in them and give them a real understanding of where HomeStart sits in the market and how we’re a little bit different.
“A lot of it is investment in time in helping brokers get loans across the line and assisting with their own professional development.”
Oliver said part of the investment has also been reaching brokers in regional areas. He added, “We’re really trying to develop good and effective relationships with brokers in these places instead of concentrating on places within Adelaide. When we started to focus on that, that’s when we brought an additional BDM on.”
The 90% of customers who were unable to go through mainstream lenders is not something completely new for the group, but tightened lending standards have had an impact on more coming through.
Oliver said, “I think for HomeStart that number has been pretty consistent, somewhere between the low 80s and 90s. For a long time it was probably running in the 80s, so I think a couple of things have happened.
“Credit standards have tightened. They have not only tightened at the banks but also at the mortgage lending and mortgage providers so that means a few more customers come HomeStart’s way and that’s certainly been something that’s consistent.
“In more recent times perhaps the Royal Commission and the public has created some upset and lack of confidence amongst potential borrowers so at the moment I’d say the overall market has shrunk on the back of that.”
