Why this lender is telling customers to use a mortgage broker
Publication Date: Thursday, 21 December 2023
This article originally appeared in Fear & Greed Business News
After almost two years of rising interest rates, the home loan market is getting a little more competitive. But people who are self-employed or work in their own small business still face challenges getting finance.
Brighten Home Loans’ Chris Meaker speaks to Sean Aylmer about the role of a non-bank lender in catering to this segment of the market – and why all customers should be using a mortgage broker to get the best deal.
Sean Aylmer: Welcome to the Fear and greed business interview, I’m Sean Aylmer. We talked recently about the signs there’s a bit of competition coming back into the home loan market. Commonwealth bank increased its home lending book, suggesting it’s getting a bit more aggressive in its pursuit of customers. That’s great for consumers, but there’s a section of the market that can be overlooked by the big banks. Anyone who’s self-employed or works in their own small business, for instance, know that it can be really difficult to get a loan. And it’s that part of the market that non-bank lender Brighten home loans focuses on. Chris Meaker is the head of sales at Brighten Home Loans, which is a great supporter of this podcast. Chris, welcome to Fear and Greed.
Chris Meaker:
Hi Sean, and thanks for having me.
Why is it hard to get a home loan as a self-employed?
Sean Aylmer:
Tell me up front before we talk about your typical home loan customer, why is it important for group of people, such as the self-employed. I know this from personal experience, small business owners, why is it so hard for them to get a loan from some of the majors?
Chris Meaker:
Yeah, look, I think the lending policy that some of the traditional banks are a little bit stricter. We’re finding sort of more customers sort of heading into the non-bank space where potentially the policy is a bit more flexible. Non-bank lenders definitely specialise in that kind of market and sort of are able to come up with more options for the self-employed customer.
Sean Aylmer: Okay, so who’s Brighten’s typical home loan customer?
Chris Meaker:
Yeah, we’re non-bank lender, founded in 2017. Sort of a diverse product range. Definitely one of the areas we specialise in is the self-employed, and that’s a really sort of high level volume that we get for those kind of customers and we pride ourselves in being able to help that particular customer set.
Sean Aylmer:
Okay, and so what are the sorts of things that you need to do to look after that set of customers? So you still have credit standards and you still have to go by the rules of the book, but what’s the extra step that means you can do it?
Chris Meaker:
Yeah, absolutely. So traditionally, if you’re going through a bank. The policy for that particular lender may be that they want to see two years financials and a lot more sort of documentation in terms of income proof, where sort of the non-bank sort of sector sort of differs. And especially Brighten is we actually sort of look at a product called Alt-doc. Alt-doc stands for alternative documentation. So we may not need to see sort of two year financials, more flexible in the income proof that we need. We may just need to see and request information from their accountant or six months BAS statements or six months trading statement. So we’re a lot more flexible on that policy, enabled to help sort of more customers and come up with more sort of solutions that really benefit that customer as well.
Sean Aylmer:
Okay, and presumably you’re more expensive than the absolute bottom of the market, but is there much of a difference for that flexibility?
Chris Meaker:
It’s different, slightly higher rates than the banks, but it really comes back sometimes, especially in the self-employed market, about the solutions for that customer and how much they can borrow.
Sean Aylmer:
Yeah, absolutely. So where are we up to with the home loan market? I mean, as the year draws to a close, how would you say 2023 has been for home buyers and particularly your end of the market?
Chris Meaker:
Yeah, look, it has been a challenging year. I think the key to a lot of consumers at the moment is sort of working with mortgage brokers. When the market does start to slow down, lenders will amend their policy and look to help more customers where they can. And really, that’s where it is really advantageous to go and speak to a mortgage broker. Currently we’re heading now 70% of the home loan market now uses a mortgage broker, and it’s great for the consumer as well. If they’re going into walking into a bank and you’ve got really one option there that the customer can go for. If you’re going to be talking to your mortgage broker, they may have one of potentially 50 options from multiple different lenders. So it’s all becoming about choice in a tougher market nowadays.
What is the role of a Mortgage Brokers?
Sean Aylmer:
I’m speaking to Chris Meaker, head of sales at Brighten Home Loans. The great thing about mortgage brokers is obviously there’s competition, but they’ve also got a duty to look after the customer. So, I think probably five years ago it might have been a bit different, but now, from what I’m aware, mortgage brokers actually do think about the customer, what’s best for them as opposed to what previously were commissions and that which they were allowed to get.
Chris Meaker:
Yeah, absolutely. Under sort of best interest duty, they have to come up with a suitable solution for that consumer. And there are so many lenders now in the market, so more than ever it’s best for a customer to know not just at a bank, but definitely outside the bank and speak to your local mortgage broker.
Sean Aylmer:
Okay, and Brighten Home loans uses mortgage brokers, I presume.
Chris Meaker:
Yeah, absolutely. So we distribute our sort of product through mortgage brokers.
Sean Aylmer:
Okay, so tell me, Reserve bank governor Michelle Bullock talked recently about households seeming to fare okay in terms of the repaying loans and things like that. As we push into 2024, how much stress do you think mortgage holders are under?
Chris Meaker:
Yeah, look, it is a challenging market. A lot of people are coming off the fixed rates so their interest rates will be coming higher. And sorry to harp on about it again, but it’s probably the time where you need to keep close to your mortgage broker. I imagine there’ll be a lot of customers looking to refinance. It may be a time of the year next year where sort of customers looking to do more debt consolidation, refinancing credit card debt, personal loans. If you’re self-employed, it may be refinancing ATO debt. So although there is challenging times ahead, with rates and interests increasing, there are options out there and there are solutions as well.
Sean Aylmer:
It’s interesting because many people have rolled off fixed rate loans. They have to be very careful because those variable rate loans they go onto aren’t necessarily the best deals in the market. That’s right, isn’t it?
Chris Meaker:
Yeah, it is. And I think that’s where it’s understanding where the market is and what options there are. And just if you’re staying with your current provider or current lender, that’s not necessarily the best solution. There’s a lot of lenders out there offering still competitive rates. I touched on it earlier about debt consolidation. There are options out there. If customers are struggling, the best bet is speak to your mortgage broker or speak to your existing lender to see what they can do.
Who is Brighten home loans?
Sean Aylmer:
Okay, so tell me about Brighten home loans. Where to from here? How big are you? What’s the plan in the next couple of years?
Chris Meaker:
Yeah, absolutely. So, we were founded in 2017 with over 150 staff. We very much operate and offer loans for customers who are employed. PAYG customers. We’re self-employed, which we touched on earlier. Expat loans, very good with overseas borrowers and customers also looking for bridging finance and also customers who are looking to construct as well. So we’ll continue to grow sort of next year. We feel that more than ever customers will be going to sort of non-banks, especially in the self-employed market. They’ll be looking for lenders like Brighten to really help them out.
Sean Aylmer:
Okay, just explain that a little bit further, because it does seem technology and mortgage broker, I mean, we’re talking about mortgage brokers, but I suppose you have to put technology into this. Suddenly the world of getting a home loan or refinancing or consolidating debt is much, much bigger today than it was even two or three years ago, let alone a decade ago.
Chris Meaker: Yeah, absolutely. I think the market has grown significantly, especially in line with property prices increasing as well. There’s a lot more demand to use mortgage brokers, there’s a lot more technology out there as well. So technology has advanced definitely over the last sort of five to ten years, and it’s becoming a lot more streamlined and quicker and becoming really a much more of a digital journey for that customer.
What will happen on the house prices in the next twelve months?
Sean Aylmer:
Okay, I have to ask you, because you are in the industry, what do you reckon will happen to house prices going forward next twelve months or so?
Chris Meaker:
I’m not an economist and I’m sure over the last twelve months no one would have been able to predict that. What I will say though is there’s always a demand for property in Australia. We know over the many years, Australian property is fantastic to invest in. I still think it will – property prices will increase while there’s still demand. And even if we do have a slowdown, and I touched on it earlier, there will be lenders out there who will sort of move with the current market, look to amend their policy and still continue to help as many customers as they possibly can. And it all comes back to really the choice and that really brings it back to sort of dealing with a mortgage broker as well.
Sean Aylmer:
Okay, so first stop, 2024. Get in touch with a mortgage broker.
Chris Meaker:
Absolutely couldn’t recommend it highly.
Sean Aylmer:
Okay, thank you very much Chris. Thanks for talking to Fear and Greed.
Chris Meaker:
No problems at all. Thank you, Sean.
Sean Aylmer:
That was Chris Meaker, head of sales at Brighten Home Loans, which is a great supporter of this podcast. This is the Fear and Greed business interview. Join us every morning for the full episode of Fear and Greed, Australia’s best business podcast. I’m Sean Aylmer. Enjoy your day.