Client circumstances drive brokers to non-banks at record levels: Broker Pulse

Analysis of the latest Broker Pulse survey by Agile Market Intelligence has revealed that 81 per cent of the broker respondents who submitted applications to a non-bank in April 2024 cited client circumstances as their primary reason for doing so, the highest proportion on record.

The survey of 288 residential brokers was conducted between 1 and 16 May 2024 to uncover their experiences with lenders during April 2024.

It found that while overall usage of non-banks dipped from 53 per cent in March to 46 per cent in April, non-banks attracted the highest proportion of brokers due to client circumstances compared to the other lender segments.

Three-quarters (74 per cent) of brokers used one of the major banks due to this reason, while 59 per cent used the non-major banks.

A third (32 per cent) of the brokers surveyed used a non-bank for its product pricing, while 14 per cent used it for its turnaround times.

Brokers have increasingly been turning to the non-banks for their broadening credit policies and range of products, with many saying the segment has been serving borrowers who require specialist loans and struggle to secure financing with mainstream banks.

Indeed, a survey of more than 100 lenders by Stamford Capital pointed to a growing presence of non-banks, with managing director Peter O’Connor saying that in the last financial year, almost 80 per cent of the transaction volume at the brokerage was with non-banks, up from 44 per cent in 2021.

The survey showed that 67 per cent of respondents expect non-banks to increase their construction lending, compared to only 33 per cent who expect major banks to do the same.

Meanwhile, 64 per cent of respondents said they also expect non-bank lenders to increase their investment lending, compared to 42 per cent who expect major banks to grow theirs.

Moreover, the interim results of this year’s Third-Party Lending Survey found that 82 per cent of brokers said non-banks are the most committed to the broker channel, while only 70 per cent said the major banks showed commitment.

Between February and April 2024, brokers were most satisfied with their experience when using Connective Home Loans (93 per cent), followed by Advantedge (92 per cent) and Bluestone Mortgages (91 per cent), while La Trobe Financial ranked and received a 66 per cent experience rating.

Business development managers (BDM) at Bluestone Mortgages and Connective Home Loans scored a 100 per cent satisfaction rating among brokers, while Bluestone Mortgages and Advantedge received the highest positive ratings for their credit assessors at 92 per cent and 87 per cent, respectively.

To participate in next month’s Broker Pulse survey or for more information, click here.

[Related: Lenders wary of construction insolvencies: Brokerage]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.