Recent data from the Australian mortgage industry shows non-bank lenders have experienced double-digit growth within the home loan sector. So, why are people choosing non-bank lenders over the banks? And should you be doing the same?
Here’s what you need to know.
According to the Sydney Morning Herald’s banking and finance specialists,
‘Cheap wholesale funding and inconsistent bank credit policies have helped to put a rocket under non-bank lenders, which are grabbing a bigger share of the crucial $1.8 trillion mortgage market.’
Private non-bank lender, Firstmac, reported a 14% increase in growth to its mortgage portfolio, valued at $11.6 billion, over the 12 months to August. Firstmac CFO James Austin said inconsistency was a prime reason for the surge in non-bank lending.
"That lack of consistency has certainly been a factor in the volumes that have been flowing through the non-banks," he said.
Austin went on to say that numerous changes to bank credit policies over the past few years, was another reason why people preferred non-bank lenders.
Liberty Financial CEO, James Boyle, told the Sydney Morning Herald that consumers were frustrated with the banks. The lender experienced an asset growth of 24% over the 12 months to June this year.
"Our continued growth has been supported by consumers’ frustration with banks,” he said.
“Since the royal commission, consumers have found responsive service times and predictable answers harder to find.”
Resimac CEO Scott McWilliam told the Herald that mortgage brokers arranged around 60% of new home loans in Australia and were playing a growing role within the sector.
"The broker sector is providing greater choice for consumers, which means there's a greater opportunity for alternative brands," he said.
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