The major bank rate hikes may be trickling down into the white label market, but leading major bank-backed wholesale funder, Advantedge, says white label products can still provide brokers with a competitive edge.
As increased capital requirements and a changing regulatory landscape have seen all four major banks raise home loan interest rates, wholesale funders and white label mortgage products have become the latest side-effect.
Last week, AFG announced it was increasing the variable rate on its white label AFG Home Loans Edge product by 17 basis points. AFG’s Home Loans Edge product is funded by Advantedge, which is backed by NAB
– which also announced a 17 basis point variable rate increase last week.
Speaking to Australian Broker
, general manager of Advantedge, Brett Halliwell agreed that white label products have had to adapt to the major banks tightening their credit policies.
“The capital increases by APRA have impacted us just as they have NAB
, so that did put us in a position where we made the decision to raise our rates… The increase that we are applying is across all the different white label brands that we have got,” he said.
However, while brokers and consumers are often originally attracted to white label products for their competitive rates compared to the major banks, Halliwell says white-labelling can still offer brokers and their clients a range of benefits.
“We have seen an enormously successful 2015 in expanding our range of offerings through new mortgages. We rolled out AFG, Connective, Astute, Loan Market and LJ Hooker – which have been an absolute phenomenal success. What that has effectively meant is that last year in 2014, only around 35% of brokers had access to Advantedge’s white label products. The number has now grown to 85% of brokers,” Halliwell told Australian Broker
“Rate is important and I think that with the rate increase you will find that our rates are still highly competitive within the market. But the other component is very much service. The brokers really want to ensure that the focus is on ease for their customers and ease for them.
“Our underwriting staff will call the broker in every instance in every deal and that helps to make sure they understand the nature of the deal and they can get the information through quickly. Ultimately what they are asking for is to provide fast and effective turnaround time.”
Halliwell says he expects the demand for white label mortgage products to continue to grow over 2016.
"What we are about in 2016 is really trying to activate brokers and show them the benefits of using white label. The take off and the volumes that we have received across the board, in particular our new customers, in 2015 have been absolutely satisfying. It has been a great increase and we think we can certainly do more in 2016 as more brokers understand the benefits and start positioning white label products to their customers," he told Australian Broker