Amid economic uncertainty, SMSFs offer brokers seeking a growing market a safe harbour, while providing investors shelter against higher interest rates, delivering a reliable return compared to other super options and growing support from non-bank lenders.
It comes as no surprise that more non-banks are entering the SMSF arena, given the success that many of them are currently enjoying.
“Since the big banks left this market, we’ve noticed more non-bank lenders popping up,” said James Austin, chief financial officer at Firstmac. “They’re offering much better rates and service. Our residential SMSF product has become a big part of our business … we’re bringing competitive SMSF options and prices to a sector that’s been largely ignored.”
Read more: SMSFs offer shelter from the storm
The situation is pretty much the same on the opposite coast in Melbourne with La Trobe Financial.
“Notwithstanding that credit growth has slowed in light of the interest rate hiking cycle, La Trobe Financial has experienced steady demand from experienced investors for property credit,” said Cory Bannister, senior vice president and chief lending officer. “For several years now, our SMSF product has been one of our most popular loans.”
One lender that ventured into this market last year was Bluestone Home Loans, which recruited employees with a solid SMSF lending experience and a mission to simplify it for brokers. Since its launch, this Sydney-based entity has experienced consistent growth in this area.
“Banks exited the SMSF lending market in 2019, which was made up of $27 billion in borrowings secured by $65bn in assets. The non-bank sector has met the ongoing demand,” said Richard Chesworth, Bluestone’s head of specialised distribution.
The increased number of lenders entering the market has led to more competitive pricing.
“What’s equally important for brokers and SMSFs is to align with a lender who will deliver on time and are experts in this specialised area,” Chesworth said. “Bluestone ensures SMSF lending applications are assessed in the same time frame as our residential mortgage applications.”
This represents a notable shift in approach, considering the rapid processing times of non-bank lenders compared to traditional lenders. Other non-banks also approve SMSF loans at a similar pace.
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