Non-Banks Take Advantage Of A Volatile Market And Grow Their ROE

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For non-banks and their broker colleagues, the last few months of 2022 have been harsh.

In November, the Reserve Bank of Australia kept up its streak by increasing interest rates to 2.85%, a dramatic rise from May’s 0.10%.

Homeowners on adjustable rates are struggling with their mortgage payments and the rising cost of living due to skyrocketing energy, gas, petrol, and food prices. As if things couldn’t get any worse for them—the Reserve Bank of Australia predicts that inflation will reach 8% by the end of this year.

According to CoreLogic figures, house prices are in a downward spiral. Nationally, values decreased by 6% over the six months leading up to September while dropping 10.2% in Sydney alone. New property listings declined by 7.5% nationwide from August to September.

Despite these obstacles, Australia’s non-banks remain in strong financial standing and are ready for expansion. It is due mainly to the powerful bonds they have built with brokers who are now more likely to refer their clients, like those self-employed or small business owners whose loan profiles don’t fit the central banks’ “typical vanilla prime,” to non-bank lenders instead.

According to the most recent MFAA Industry Intelligence Service report, nearly 30% of all mortgage brokers are now opting for non-bank lenders and writing commercial loans. The survey covered a period from October 2021 to March 2022 and revealed that this trend is continuing to overgrow.

MPA cordially welcomed executives from some of the top-ranked non-banks and two brokers to attend the 2022 Non-Banks Roundtable in Sydney, Seta. At this event, we discussed various aspects such as how non-banks service broker channels; rivalry with banks; expansion into different segments like commercial lending, etc.

“The one thing we have learned is that when things begin to get a little bit unsettled in the marketplace.”

Many brokers have not experienced so many rapid rate rises, and it has unsettled not only some brokers but a lot of mums and dads and mortgage holders – this is the time when the non-banks shine,” John Mohnacheff, the group sales manager of Liberty, declared.

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