A Brisbane-based lender has called on banks to “catch up with the broking community” and recognise that non-bank lenders are increasingly important players in the prime end of the lending market.
The managing director of Firstmac, Kim Cannon, said it was ridiculous to claim non-banks were expanding market share by using less rigorous credit standards. He said Firstmac had a better quality book than any of the major banks.
He said, “Some banks and commentators continue to talk about non-bank lenders as if we are basically competing for the scraps at the lower end of the market using less stringent credit standards but the truth is that Firstmac is competing with the banks for prime loans and beating them.
“We wrote more than $3billion worth of loans in 2017/18 and every one of them was a prime loan.”
Cannon said that Firstmac’s loan quality was among the best in the entire lending industry as measured by loan arrears and defaults.
For every 1000 mortgages written by Firstmac over the last 15 years, only one has ended in default and only four loans out of 1000 are in arrears.
As a result, international ratings agency Standard & Poor's awards Firstmac its highest possible ranking for loan servicing - STRONG.
Some non-bank lenders specialise in non-conforming loans, while others are a mix of non-conforming, near-prime, and prime.
Cannon said that attempts by some bank executives to blame their slow growth on lax credit practices by non-banks were a copout.
“Better products, better service, agility and consumer trust are the key to expanding market share for non-banks as Firstmac has shown,” Cannon said.
The Firstmac Group achieved strong growth in the 2017/18 financial year, going from $8.018b of loans under advice at 30 June 2017, to more than $10b at 30 June 2018, a Compound Annual Growth Rate of 23.54% writing exclusively prime loans.