The third-party channel could seize a “gold mine” worth of finance business beyond writing mortgages, if more brokers were willing to expand into consumer and commercial finance, according to Liberty Financial national sales manager John Mohnacheff.
With broker mortgage market share having grown to almost 70% from 50% over a decade, he said a large chunk of the market still specialises in writing only mortgages, passing up opportunities to become holistic providers of consumer and business finance.
“Seventy per cent of home loans are going through the broker channel now,” Mohnacheff said. “Big deal. Only 20% of all commercial loans are being done through brokers, so that means we still have 50% to make up there to match where we’re at with residential mortgages.”
He added brokers wrote about 10% of personal loans and 15% to 20% of car loan business.
“I am talking about the scope of brokers to own this channel,” Mohnacheff said. “If you look overseas brokers do so much more. If you’re a mortgage specialist, what you should be aiming to be is a consumer finance specialist. People have personal loans, cars, small businesses, and you the broker should cater for all those consumer needs.”
Expanding beyond the mortgage
Mohnacheff said mortgage brokers just had one touch with their client – when they wrote the home loan – and that meant they would be unlikely to need their services again for several years, even with brokers following up for regular loan reviews.
He said this risked missing the greatest asset anybody gives a broker – the application form.
“Clients tell brokers absolutely everything, maybe more than their best friend. How many cars they have, how much money they have, their super, where they work, what they earn – everything. And with all that information, all they are going to give them is a home loan?
Mohnacheff said brokers should be looking at that information as a potential gold mine.
“Brokers should be saying, ‘I see you’ve got an eight-year-old car – when you’re thinking of changing, come back to us. I see you have a personal loan – can we consolidate that, wrap that up? Oh, that was to help your daughter was it – is she OK? Can we help there?’ ”
“When a client needs a car loan, brokers should be able to say, ‘sit down, I can help you with that’. If it’s a holiday, they should be able to provide a personal loan. If clients are thinking about buying a truck or supplies for their plumbing business? Brokers can help with that.”
Mohnacheff said whether a broker was writing a home loan or another type of loan, including what are often perceived as more complex commercial loans, essentially all brokers were doing was “moving money” and all that changes is the security.
“It’s really that simple. Are there nuances in a commercial loan? Yes. But if you’ve been doing home loans for 10 years, it is not that hard to write a commercial loan. And it’s wonderful helping people.”
Liberty Financial still broker focused
The biggest challenge for non-banks in the current market, Mohnacheff said, was that banks have cheap deposit funds. Rather than paying depositors, banks are giving away thousands of dollars in cashback offers to lure new clients. That’s just not something the non-bank sector does.
One way Liberty Financial is remaining attractive to borrowers is through the adjustment of its serviceability buffer rate, where it is sometimes able to go as low as a 1% when assessing borrowers, compared with the 3% buffer rate banks were using.
Mohnacheff said Liberty continued to grow because of “being there for the broker”.
Liberty’s offering has all been “built with the broker in mind”, he said, across residential, asset finance, business capital and commercial lending businesses, as well as MoneyPlace personal loans, LFI general insurance, and ALI life insurance.
“We’ve been going for over 25 years now, and since day one we have been broker focused. Everything we do is with the broker in mind,” he said.
