Buyers turning to brokers as home ownership barriers increase

by Phil McCarroll06 Sep 2016
Government-backed lender HomeStart Finance believes the increased barriers home buyers are facing are behind a steady increase in broker referred loans.

Figures from HomeStart show that over FY2016 brokers wrote 33% of the non-major’s new lending, up from 31% in FY2015 and 26% in FY2014.

A statutory body that reports to the South Australian Minister for Housing and Urban Development, HomeStart recognises government payments as income stream, one of many features that chief executive officer John
Oliver believes makes it an attractive choice for borrowers who may be struggling with the cost of living and stricter lending criteria imposed by many lenders.

“HomeStart has a unique position in the market in that we have an innovative product range, including offering a higher loan to value ratio than most other lenders, and recognise Government payments as a form of income,” Oliver said.

“This provides brokers with an alternative solution for customers who are struggling to meet the financial requirements of the big four banks, but don’t want to give up on their home ownership dream,” he said.

Recent figures from the Australian Prudential Regulation Authority (APRA) show that that new residential home loans originating through the broker channel increased by 25% in the June 2016 quarter, which Oliver said shows that brokers are steadily reinforcing their position.

This result shows that increasing numbers of home buyers are going to a broker, rather than walking into a bank, clearly cementing the place of brokers in the Australian loan market,” he said.

With the broker channel continuing to grow, Oliver said HomeStart was committed to broadening its presence in the sector, including by partnering with additional aggregator group FAST in the past year.

“We have continued to focus on the broker market over the last few years, as it is a good strategic fit with our distribution model.

“Brokers provide us with a cost effective channel to broaden our geographical footprint and we continue to invest in this channel to ensure we are a strong partner.”