As the housing market softens leading to lower demand for residential lending, diversification is even more important, says lender CEO
Peer-to-peer lender RateSetter recently inked a partnership with mortgage broking firm Mortgage Choice to strengthen the latter’s personal loan lending panel. The partnership will allow RateSetter to grow its distribution network by enabling the more than 600 Mortgage Choice brokers to offer RateSetter’s unsecured personal and green loan products.
RateSetter CEO Daniel Foggo and Mortgage Choice CEO Susan Mitchell spoke to MPA about why brokers need to get into those kinds of loans.
A more sustainable business
Brokers’ deep relationships with clients mean they’re often in a position to identify one of the first credit needs of many Australians — a personal loan, according to Foggo. From consolidating a debt to financing the purchase of a new car, personal loans give brokers an opportunity to offer a quick, low-rate finance option for their clients.
“Diversification into new products helps brokers build a more sustainable business, and deeper client relationships,” Foggo said. “It’s particularly important in the current environment where a softer housing market has led to lower demand for residential lending.”
The 55.7% market share of brokers in new home loans, as revealed by the latest MFAA quarterly survey, proves brokers continue to be Australia’s preferred channel for residential home loans. Foggo believes the same can be said for personal loans.
“As consumers look for better deals apart from traditional lenders, brokers are perfectly placed to provide access to the best personal loans with the best rates in the market,” he said.
Green loans are affordable finance options for home and business owners looking to purchase approved energy efficient products, according to Foggo. These products include solar panels, energy-efficient lighting, and energy-efficient heating and cooling systems.
Mitchell sees the partnership with RateSetter as a means to bolster brokers’ ability to deepen customer relationships by diversifying their revenue streams. “Mortgage Choice brokers help customers make better choices with their money, so they can afford to enjoy things in life that are important to them,” Mitchell said. She cites holiday expenses, weddings, medical procedures, or lifestyle pursuits as examples of things customers tend to use their personal loans for.
Easy compliance
Personal loans fall under the normal responsible lending requirements under the NCCP. Foggo finds many brokers diversify into personal loans, because the requirements are similar to other lending options they already provide.
“The requirements for personal loans are the same as for mortgage loans. If a broker is comfortable with arranging home loans, moving into personal loans is an easy transition,” Mitchell said.
Related stories:
More homebuyers seek brokers before banks
Mentoring the next generation of brokers amidst increased scrutiny
