As the current market conditions force many brokers to look for left-of-field solutions, Bluestone Home Loans’ Scenario Hotline has seen a sharp uptick in calls.
Launched in February by the non-bank lender that specialises in non-standard loans, Bluestone CSO Tony MacRae said the Scenario Hotline, which allowed brokers to speak directly to an underwriter, had received more than 2,500 calls or over 300 per month.
“Brokers have really embraced the Scenario Hotline, particularly brokers who are new to non-standard lending or haven’t used Bluestone before,” said MacRae (pictured above). “It makes the whole process easier for them as not only do they have deal certainty, but the underwriter will also help them package the application.”
As interest rates reached the end of their decades-long decline culminating in the record lows of early 2022, the mortgage market became more streamlined, automated, and transactional.
Nevertheless, inflation, a cost-of-living crisis, and 12 rate increases in 13 months have made what once was a basic vanilla loan into a non-standard choc-hazelnut swirl.
To accommodate this added complexity thrust upon brokers, Bluestone introduced its hotline so brokers can call 13 BLUE and speak directly to the underwriter when the scenario becomes complex.
“Brokers are able to speak with a credit underwriter and workshop a deal, get a summary of the conversation with a reference number and then regularly have the formal application assessed by the same underwriter,” MacRae said.
“We understand that non-standard customers traditionally make up about 10% of customers who walk through a brokers door, so it’s not something they are necessarily dealing with on a day-to-day basis.”
So far, the Scenario Hotline has helped with more than 350 deals that might have previously walked out the door of a broker, according to MacRae.
For example, this process helped a father and son with debt consolidation and cash out, he said. The father and son customers were looking to refinance their owner-occupied property to consolidate debt and seeking $20,000 cash out to purchase a new car.
While using the son’s PAYG income would’ve been no issue, his father’s aged pension income could have been more difficult to service. The father’s age also made things a little more complicated. At 74, a standard loan term wouldn’t work in this situation.
Taking the complex nature of the scenario into account, the underwriter advised the broker to submit the application under Bluestone’s near prime full doc product.
They were able to confirm that a loan would be possible as long as the exit strategy would fall to the son’s responsibility.
“We were able to workshop a solution on the call with the broker and provide a likely ‘yes’ on the call with the broker, along with documentation to submit with the loan – all of which would likely not have been possible with a mainstream lender,” MacRae said.
Another Scenario Hotline success story helped an existing customer with refinancing and cash-out after a business loss-making year.
The customer, who had recently transitioned from a sole trader to a company structure, was looking to refinance his home and seeking cash out for a car and home renovations.
The customer was an existing Bluestone prime borrower with a full doc loan, but his company made a loss in the 2022 financial year.
His broker contacted the Bluestone Scenario Hotline to discuss how best to refinance the loan internally and get cash out.
“Having carefully considered the customer’s situation, our underwriter advised the broker to apply for our prime alt doc product, enabling the customer to refinance the property by switching from full doc to alt doc,” said MacRae.
“Once submitted, we were able to unconditionally approve the customer’s application to refinance, moving him towards his plans for a new car and renovations.”
Helping non-standard customers were others can’t
MacRae highlighted that Bluestone’s goal was to become the “go-to lender” for non-standard customers, and the Scenario Hotline was just one of the ways the non-bank was working towards achieving this objective.
Fresh from revamping its policies and reducing its serviceability buffers, the non-bank lender said non-standard loans played an important part of its business strategy.
“We have deep expertise in working with customers who have a history of missed payments, arrears, past bankruptcies or other impairments,” MacRae said. “We also have unlimited debt consolidation across all of our products, with no limit on the number of debts or loans accepted.”
“We want to understand a customer’s story and will assess each application on a case-by-case basis. Essentially, we’re able to help customers that banks can’t or won’t.”
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