Despite the lockdowns and the well-documented struggles of the SME sector, the asset finance space has been going through something of a renaissance.
More and more mortgage brokers have added asset to their portfolios in the last year, as clients look to their brokers to provide finance across multiple angles.
Platform Finance know a thing or two about asset finance: they just posted FY21 results that saw a 27% rise in settlements, with commercial lending up 18% and, perhaps more relevantly for the mortgage broker channel, 62% in consumer lending.
With that in mind, Australian Broker sat down with Platform CEO Ryan Young for a chat about the state of the asset finance sector, and if more brokers should be offering asset as an option.
“It’s hard to know where the asset finance market is at the moment,” said Young. “Some of the data that we’ve relied on in the past is not as accurate as it used to be. Overall, I think the market is up in a area of 10-15%, and we’ve exceeded that.”
“The key underlying markets in asset finance – construction, farming, transport and car sales – have been really strong, and relatively unaffected throughout the pandemic, which has helped the market.”
“On the retail side, in all the places where people used to spend their money, they’re currently not able to spend it, so there’s been a surprising uptick in lifestyle assets, which is why I think asset finance has tracked well.”
“For ourselves, the reason that we’ve outstripped the market is that we’ve had quite a good balance across our products, so we’re not hinged to one aspect in particular.”
“Having a good consumer capability has helped us over the last 12 months, and having a wide spread of funders that has helped brokers to tap into all the different niches has been useful too.”
Mortgage brokers might be missing a trick if they aren’t offering asset options, says Young.
“Every time the mortgage world gets more difficult – usually to do with compliance, but now sometimes with funders – people start to look around to see what else there is out there,” he said.
“The pandemic demand has been really good for mortgage brokers, but there are issues in how hard it is to settle transactions. Commercial brokers tend to do both, and it’s a general theme across everyone at the moment that we don’t know where the demand is going to come from.”
Brokers should be helping customers with assets as well as mortgages
“It pops up in unexpected places and brokers want to help their clients because if they’re not helping them, someone else is. Asset has been strong in that regard because brokers are getting the enquiries.”
Tech is perhaps even more vital in asset than it is in mortgage and SME lending, because of the unique requirements of lending on assets.
“The main thing in asset is that it’s really hard to keep up at the moment, with the number of funders that are out there, the different compliance requirements and how precise a lot of the policies are,” explained Young.
“If you’ve got 40 funders out there, all with different requirements, you can’t do that without a bit of tech these days. If you do, you’re only using four to five funds because that’s all you can cope with – it’s certainly all mine can!”
“I think tech is really crucial to keep track of all the different options and to see where your deal fits best.”
“There’s two elements in asset. There’s security, which is much more diverse than a house. A house sits on a block of land, doesn’t go anywhere and generally goes up in value. In asset, there’s a million different types of asset: new, used, they can disappear or burn down or whatever.”
“There’s more variables in the client too. If you’re doing consumer lending in mortgage, you’re dealing with a PAYG. It’s a payslip. SMEs are much harder to pigeonhole. Their cash flow changes day to day and week to week. Their expenses change. There’s so many more variables.”
“In asset, that’s why you have more funds. They’re all trying to target different aspects of SMEs, and you can get really specific. That’s why we have 40 funders on our panel and not many of them are exactly the same as any others. There’s so many more variables and funders are a lot more specific in what they want.”
