Bank says no? You can still win

There is no doubt that lending in Australia has changed dramatically over the past year, with near-mainstream lending becoming the fastest-growing sector and lenders beginning to see the rise of the “super prime” borrowers.

Given the banks have taken a harsher stance on what profile client they are willing to approve following the banking royal commission and an increasing trend from the majors to water down their offerings around offsets etc., the non-bank lenders have definitely started to get a grip on some of the market share, largely due to more borrowers falling outside of the major funders credit policies.  This has also come from Finance Brokers turning to non-banks for more specialised and flexible products for their clients.

Dan Fox, Founding Director of Fox Finance Group and Ume Loans revealed that the fastest-growing segment of the lending market was near-prime borrowers.

Mr Fox said: “Near-prime lending in our business is definitely proving to be one of the fastest-growing sectors that we are seeing. What used to be an approval with a major tier one lender is now not the case, hence the need for more applications to go under the consideration of some of our sub-prime lender options. This is been seen across our equipment, home loans and business divisions. We have definitely seen a tightening up over the past 12 months which is creating a real opportunity for some of the other lenders on our lending panel.”

Nathan Drew, Managing Director of Fox Finance Group added, “We’ve recently started a complex commercial specialist in our business within our commercial real estate division and from what we are seeing, the near-prime sector in this space is growing substantially fast as well.”

Mr Drew elaborated: “As a business we have needed to re-categorise how we determine what’s prime and near-prime. Now, when we look at it, we look at ‘super prime’, which we would say is probably what the banks are looking at now. Prime, which is probably the loans that would have been bankable all day, every day, which have probably slipped out of major bank’s appetites and near-prime is the old traditional space, and sub-prime sits at the end of that.

Even though there has been a lot to keep up with in our industry over the past 12 months with the Banking Royal Commission, we feel that our business will continue to flourish with the support of our non-bank lenders as more people look for more choice and turn to businesses like ours to get that freedom of choice. I think it will be some time before we see the major banks’ credit policies change. I think it’s going to increase the broker market share and increase the non-bank market share,” Nathan Drew said.

“We are experiencing a credit tightening from some lenders in the market place. This comes at a time where some lenders position themselves to assess someone’s living expenses directly from the use of bank statement technology to calculate living expenses. This is posing some challenges for the lenders and I don’t see that being retraced any time soon. It’s a tricky time for consumers who are out there looking for finance, but if you know where to look there are still great loan products at low rates available, Mr Drew said.

If you have questions about your finance options, speak with one of our team today for an obligation free chat on 1300 665 906 or contact us for more information.