According to industry experts, there are some major and unexploited market opportunities that exist for brokers that are willing to look beyond the conforming borrower. However, brokers will need to understand their borrower better, be willing to extend their knowledge and want to explore non-conforming lending to gain a slice of this lucrative market.
The Non-Conforming Borrower and Home Loans
Extensive research carried out over the last 18-months reveals that 6 out of 10 home loan borrowers that are rejected by standard lenders are often suitable for unconventional loans. However, many brokers do not understand that this market has grown considerably, and there are many new home loan products on the market offered by non-conforming lending specialists which are suitable for this type of borrower.
Industry specialists state that a high number of brokers were surprised when told that there are significant breaks now available to non-conforming borrowers. Many of these opportunities are accessible for brokers who are keen to explore other options for their borrowers.
Non-conforming lenders said that potential customers who do not meet the guidelines of standard lenders should still be able to borrow. These lenders said it was important for brokers to encourage borrowers who were not accepted by standard lenders to look at alternative options.
The Profile of the Non-Conforming Borrower
The size of the non-conforming market segment was large and continually growing due to changes in lending criteria, which made it harder for some borrowers to determine and meet specified guidelines. In fact, many borrowers who were eligible for non-conforming loans may have qualified for a home loan 12-months ago from a standard lender. Now their applications were being declined.
Data suggests that 39 percent of non-conforming borrowers were turned down by a standard lender. A further 24 percent said they would not apply for a home loan for fear of being declined.
Research also found that 33 percent of non-conforming borrowers were declined by a standard lender because their form of income did not meet those specified. Some 38 percent of non-conforming borrowers said that they would wait before applying for a home loan due to their current income stream.
Plus, more than 16 percent of non-conforming borrowers said they couldnt be helped due to circumstances. Others knew that their situation would result in them having to pay a higher rate of interest.
How a Broker Can Take Advantage of Non-Conforming Market Opportunities
Its important for brokers to understand that a borrowers needs are continually changing, whether this is due to their lifestyle or other outside influences, and that they need to be aware of these changes so that they can offer a borrower the right loan. Brokers who a looking to break into niche markets and grow their business need to look at all opportunities by educating themselves. This knowledge will allow them to offer real solutions to all borrowers, even those who dont conform to traditional lending standards.
eChoice, one of Australias award winning mortgage aggregators, offers brokers looking to improve their retention rates and build their business a marketing toolkit for FREE. These tools include:
Email templates: set and forget campaigns Show your clients that they are important to you with a series of emails that can be automated happy birthday, fixed rate expiry, property report, loan anniversary, and a seasons greeting.
RBA email A monthly update on the Reserve Bank of Australias decision on the official cash rate, along with industry commentary.
Property e-booklets Educate your consumer with a series of guides such as the first home buyer, refinancing, property investment, and buying guides.
Social media management Rather than manage your social media, we do this on your behalf by posting content to your Facebook and LinkedIn profiles.
Website tools Traffic generating tools such as mortgage and finance calculators and website banners.
Customisable flyers Our most popular flyers are the home loan terms and checklist, my promises to you, about us, our lenders and refer a friend.
Do you want to know more non-conforming lending and how eChoice can boost your business? If you said YES, then contact eChoice, we can help YOU take your brokerage business to the next level.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!