The Mortgage & Finance Association of Australia, in conjunction with non-bank lender Resimac, has developed a comprehensive guide for brokers on near-prime and non-conforming/specialist lending.
The free eBook, Finance for when your customer doesn’t fit the mould: A broker’s guide to near-prime and non-conforming/specialist lending, is designed to deconstruct near-prime and specialist finance into easy-to-understand building blocks that help show that this form of lending can be accessible to brokers of all levels.
“Brokers play an important role in providing access to, and choice, in credit, including to those customers that may not fit the traditional mould. There are a growing number of Australians with diverse income streams or interesting scenarios who may not meet the requirements of a traditional prime loan, but this doesn’t mean they aren’t good candidates for credit,” said MFAA Head of Marketing and Communications Stephen Hale.
“Near-prime and specialist loans are an important part of a broker’s toolkit for assisting these clients and helping them achieve their goals.
“We’re pleased to be able to support our members with this new resource to increase their confidence to recommend these types of loans when it’s appropriate.”
With near-prime and specialist loans often perceived as being more time consuming and complex to write, the eBook offers guidance and tips on how to make the application process as straightforward as possible.
It also covers the types of customers and situations near-prime and specialist loan products could be used for, breaks down documentation requirements and outlines the steps to writing these types of products, plus much more.
The release of the eBook comes off the back of recent Resimac research that found near-prime/specialist finance only made up an average of 11% of a brokers’ business over the previous 12 months, whereas brokers estimated that on average, 38% of their customers were self-employed. Furthermore, 78% felt that lenders were making it more complex and difficult to operate as a broker.
Chris Paterson, Resimac General Manager Distribution, said near-prime and specialist products had become more important as the economy emerged from the pandemic and into a market of increasing interest rates.
“During the various lockdowns, small business owners and the self-employed were some of the hardest hit. Despite a return to normal trading activity, their options for obtaining credit have become more limited due to the previous drops in trade. Many individual borrowers have also suffered temporary financial setbacks.
"As interest rates across the variety of credit products – such as personal and business loans – increase, prime alt doc and specialist mortgage finance may increasingly become a suitable means to help consumer consolidate and manage a variety of debt.
“These customers don’t quite fit traditional prime lending guidelines, but near-prime and non-conforming products are well positioned to fill this void. By diversifying into near-prime and specialist lending, brokers have an opportunity to grow their business through attracting more diverse customers and by servicing more of the needs of their existing customers.
“We’ve seen a lot of growth in this space over the last 12 months. During the first half of FY22, Resimac’s near-prime/specialist settlements increased by 190%.”
