Specialist lender targets advisers with cheap loans

by Calida Smylie07 Apr 2014
A specialist lender has reduced the interest rates on its personal home loans to financial advisers in its next bid to actively target the market.

Investec Bank is now offering advisers two-year fixed rate home loan packages at 4.54% per annum (comparison rate 4.79%) and 4.79% for variable rate loans (comparison 4.84% rate).

Investec Australia adviser services head Gareth Bird said over the past six years the bank has worked closely with the clients of advisers, and has expanded to include personalised lending designed for the advisers themselves.

“Where we’ve been a little bit different is we’ve been able to offer a high LVR to our specialist clients without charging lenders mortgage insurance, and the way we’ve done that is by combining two mortgage loans into one product effectively.

“The first 80% is through our syndicated lending arrangements, either with Adelaide Bank or CBA, and then Investec lends the portion above 80% on our own balance sheet at a higher rate. But if you take that lenders rate over a reasonable period of time you can have a better financial outcome than if you have to pay mortgage insurance,” he told Australian Broker.

Investec likes to specially target professions, offering similar mortgage packages to the medical community since 2006, and accountants since 2009.

The bank does not have a formal broker channel and Bird said he cannot speculate on whether they will branch out to brokers in future.

“It’s a substantial commitment to make if you want to enter that space. It’s certainly not something that’s in our immediate conversations. And it would really require some proper thinking and investigation on our side before we’d make that leap because you don’t want to do it half-heartedly, especially when it such a well-established industry.”

Instead, Investec hopes that by offering personalised loans to advisers, this will in turn open up the adviser market and their clients to them.

“We dealt with a very small aspect with adviser community historically but now with a personalised offering we really are applicable to the entire financial advisory market. It’s just good for us to spread our message far and wide and get some feedback from the market as to how effective it is,” Bird said.

Over the past five years Bird has seen an increase in advisers wanting to impact on their client’s entire financial affairs, from investments to home loans.

However, even with FOFA regulations making adviser red tape harder to cut through, he does not believe there has been any specific shift towards advisers wanting to become mortgage brokers.

“The broker industry is very well established. I think the challenge for financial advisers is how they partner with the expertise in the broker channel to deliver to their clients. I don’t know if it’s a threat [to brokers], it’s more about how [advisers] can make it work for their clients.

“Mortgage broking is a skill and a financial adviser would have so many hours in his day, they’ve got to decide whether they want to incorporate it into their overall position, and invest time and effort and give up other aspects, if they want to focus on broking.”

Investec placed some of its units – including a $2 billion loan book – on the market in November to try to transform its business into one based on investment banking activities. 

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COMMENTS

  • by chrisc 7/04/2014 4:20:40 PM

    can't be making too much for their investors at these rates after costs