Investors go to specialist lenders as banks pull back

Mortgage brokers are reportedly finding alternative sources of finance for their clients as banks pull back on property investment.

With the recent introduction of higher LVRs and stricter requirements for property investment mortgages, applicants are increasingly turning to non-bank and specialist lenders.

The Adviser reports that Sydney brokerage Smartmove is already starting to use specialist lenders for investor loans.

“Just in terms of that more unique approach that some of the smaller players with a more nimble approach can take towards serviceability and some of the credit policies and niches they create,” said co-founder and director Simon Orbell.

Sydney-based broker Multifocus Properties & Finance is shifting from using banks for its investor clients to setting up mortgages through mortgage managers.

“We used to use the big four banks a lot as pricing and products were unbeatable,” said CEO Philippe Brach. “Nowadays, we tend to shift some satellite loans to mortgage managers, who have access to funds from different sources at reasonable rates and at much better servicing levels.”

Could P2P lending be an option?

At this stage, P2P lending has done well as a vehicle for small, unsecured personal loans, and in the small business market. SocietyOne, for example, offers loans from $5,000 up to just $35,000, with loan terms of 1 – 5 years.

There are already 8 P2P lenders in Australia (SocietyOne, Ratesetter, ThinCats Australia, DirectMoney, MoneyPlace, Lending Hub, Marketlend and OnDeck), with several more looking at entering the market.

P2P lending in Australia has been growing very quickly, leading Morgan Stanley Research to forecast that P2P lending to consumers could reach $10.4 billion by 2020, making up 6% of the total consumer lending. They predict P2P lending could reach $11.4 billion for small business lending. Currently, the P2P market in Australia is worth less than $100 million.


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