Brokers sending a quarter of deals through non-banks

by Adam Smith11 May 2012

A lender has claimed brokers are now writing up to a quarter of their business through non-banks as attitudes toward the sector shift.

An online broker survey conducted by Homeloans Ltd has claimed that brokers send nearly 25% of their business through non-ADIs. The company said the survey indicated brokers no longer saw non-banks as lenders for borrowers with poor credit, with just 12.9% using the lenders for clients with credit problems.

Recent AFG figures lend some credence to the claim, showing 21.6% of the aggregator's April volumes were via non-major lenders.

Reasons brokers gave for recommending non-bank lenders were product features, the relationship they had formed with their BDMs and competitive interest rates.

“Gone are the days of non-bank lenders being perceived only as lenders of last resort or for those borrowers with adverse credit history,” Homeloans general manager of sales Greg Mitchell said.

Mitchell claimed brokers’ attitudes toward non-bank lenders had changed as public ire toward major banks grew.

“Today, brokers are now more open to recommending non-banks because of the growing discontent with the major banks and also because of the wider product ranges and competitive interest rates being offered,” Mitchell said.

The survey also revealed that nearly 80% of brokers believe non-banks “are a competitive alternative to the majors”. Nearly 81% said they had sent a deal through Homeloans before.