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ISSUE 7.10 May 2010
Smaller lenders throw down the gauntlet
Gino Marra
Brokers to support small lenders more
Smaller lenders have been pulling out all the stops to convince brokers to recommend their products to clients rather than sending them to the major banks. Carrington National has taken an innovative approach to attracting borrowers and brokers to their products, by offering to pay for the LMI premium for loans up to 90% LVR where the premium is less than $4,380.
Carrington MD Gino Marra said non-bank lenders in general are more innovative than the banks in their offerings. “The pendulum is swinging back towards the non-bank lenders and some sanity is coming back to the market,” Marra said. “Consumers have seen banks raising rates outside of the RBA and they’ve realised that there is no more risk going with a non-bank lender than there is going with a major bank.” Marra said the offer, open until November, is for either Genworth or QBE LMI insured clients and
that brokers can earn up to 1.2% commission on its All-in-One product or up to 0.8% commission on the Horizon product. Non-bank lender Collins Securities and mortgage manager Iden Group have both promised mortgage brokers higher commissions for loans they originate, as they look to gain market share in an environment where the majors dominate. Collins CEO Rob Emmett said the lender was increasing the amount paid on its low-doc refinance product to a maximum of 0.6% upfront and an ongoing trail of 0.25%. “It’s really a reflection of the work that goes into a refinance application from a broker perspective – and also we’ve got increased funding for that product,” Emmett said. “What we’re finding is that as the banks tighten up and restrict a lot of their parameters and credit policies it’s opening the door to the non-banking sector.” Emmett said he is cautiously optimistic going forward and has seen evidence that funding sources have increased in the past 12–18 months. While brokers and consumers are still sending the majority of their business to the majors, Emmett said there are signs that the third party channel is ready to embrace non-bank lenders once more. “It’s certainly a challenge but the walls are breaking down before our eyes,” he said. Page 18 cont.
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