Non-bank lenders

Every lender in our land relies on securitised funding - quite heavily, generally. Most of them have a good percentage of their RMBS on 90 or 180 day swaps. One of the reasons Basel 4 seeks to introduce a 12 month minimum...

I guess my point is, when we say "non banks" it's not a generic term. FirstMac and Liberty are two very different beasts for example. FirstMac applies a 7% assessment rate. Liberty does not. So for the purposes of this discussion I just wanted to point out to readers that some non banks are just as strict, prudent and "APRA-hended" as the big 4. Some are not ... The GFC era sorted out the quality businesses from the lower quality businesses.... so we should be careful not to dismiss non banks as being a dead end.

if we are discussing Liberty for their borrowing power, let's call them Liberty

 

Fair enough, and point taken. The maximum I am looking at is around 100K which is all dependent on my valuation price. I always keep financial buffers in place to allow for all the usual property related issues that can come up.

 

Whilst we are on the subject are any of you using Pepper?, if so are they ok?

 

They lend more than most lenders if you've already got a portfolio, but not as much as Liberty. They are generally a lot cheaper than Liberty, especially if you've got a larger deposit.

Pepper is kind of the lender you use towards the end of the party, Liberty is the last round of drinks before the bar closes.

 

Well that's about where I am now with my current lenders not willing to lend me anymore, and I only needed about 80K. Pepper looks like the way to go. Thanks

 

Yep 100k IP, it's a bench at Bondi Beach.

 

I have argued with you about this before Euro! The way I remember it the non banks did not engage with mortgage brokers until that part of the industry was already well established. It was ING and Homeside (nab) that really kicked things off with big branded brokers like Mortgage Choice back in the late 90's.

Before that it was banks v non banks with non bank loans being arranged by the non bank staff / franchisees etc. Aussie, Wizard, Rams etc.

I concur with the rest of your sentiments.

 

Aussie wasnt and isnt a non bank - it was a white label funder, then a mortgage manager. It is owned by CBA now. So its hardly a "non" bank.
RAMS was a non bank - that one is correct. Today it is owned and operated by Westpac though. So its hardly a "non" bank any more.
WIZARD wasnt a non bank either - it was a mortgage manager .Today its books and franchises are owned by Aussie ( who used the proceeds of their first 49% sale to CBA to buy it from GE Money after they ran away post GFC ) so one could argue Wizard is ultimately owned by CBA now. So its hardly a "non" bank.

A non bank is a non ADI which manufactures its own products and funds it via RMBS
A mortgage manager such as those you have mentioned is a "brand" ( Aussie, RAMS, Wizards etc) that uses someone elses money to fund their products. They dont manufacture their own product or policy - and they dont issue RMBS. They just buy someone elses money at wholesale rates and whack their brand on it ...

Experienced brokers should be able to differentiate between mortgage managers, white label and non banks as it pertains to this debate

Real non banks like Firstmac dont have funds provided to them... they provided funds to other brands. loans.com.au for example is owned and funded by Firstmac.

Using Aussie as an example, for the majority of their existence they were funded by PUMA (Macquarie's wholesale arm) and ORIGIN ( ANZ's wholesale arm) Today they are owned and funded by CBA. Their car loans arent theisr... their credit cards arent theirs... flip one ober and see who it's issued by

Virgin Money launched using Westpac funding. Virgin Credit Cards are issued by Westpac.

I could go on... but point is( and was in my earlier post) ... lets try and get the non bank discussions right. Lets start by getting their definition right...that would be a fantastic place to begin...... and lets then distinguish between those who did right by their clients post GFC, and those who didnt... and finally lets further distinguish between those who are now quite mainstream ( firstmac) and those who arent ( liberty, resimac, pepper) when discussing "non bank servicing" ..... it really should be "Liberty and Pepper servicing"

 

I was not arguing about the definition of what is and isn't a non bank.

I was arguing with you about how mortgage brokers started and you said they wouldn't exist without non banks. Simpy not true.

 

So, I am about to have some loans moved over to Resimac on brokers recommendation - purely for the rate and offset option, not so much servicibility. Am I in for a world of hurt?

 

Not necessarily - are you paying LMI? And are your loans cross secured?

 

No and no - Seperate loans for a OO and IP. They offered to cross them so I would get the OO rate on the IP but I declined, didn't think it was a great move on some additional reading..

 

Are you sure?
I don't know anything about the product, but it sounds like there may be an issue if it is a 'redraw' offset.

 

If is is a loan account then deposits would be paying it down.

Is there supposed to be a product ruling on these things?

I would suggest anyone contemplating using these lenders to seek tax advice on the deductibility of interest issues.