The longtime mortgage adviser, who heads iLender Mortgages, sends a message of optimism heading into Christmas, in contrast to the general gloom.
Friday, December 16, 2022 at 6:28 AM
Jeff Royle believes the nonbank lending sector can grow and bring advisors along.
Royle is the man who brings an sometimes quirky air to an often stuffy industry. He calls himself a “financial paramedic” and describes himself as an iLender “skipper”.
He’s even a “mortgage guru.”
But he’s very serious about his latest predictions.
Basically, the gap between bank and non-bank lending rates has narrowed or even disappeared, he said.
He cites the example of Resimac, which has a floating interest rate of 7.34% for loans with an LVR of 80% or higher, which is above the industry average and that of many mainstream banks.
Royle’s argument is that when OCR rises, so do bank mortgages, often with floating rates of 7.99% and a median two-year fixed rate of 6.95%.
At these levels, however, the gap between banks and non-banks is relatively small and may even close. This could make non-banks more attractive to advisors and their clients.
“About 10 years ago, if you moved from banks to nonbank lenders, you would have faced a rate hike of about 2%,” Royle said.
“It has changed a lot…. There are a huge number of options out there. Nonbank doesn’t always mean higher rates. It can be, but not always.”
Royle adds that even if interest rates are high, non-banks may lend when the main bank does not, making it worth paying extra interest.
So what does this trend mean for advisors?
Advisors account for about 50% of bank originations, but over 85% of non-bank originations, according to Royle.
So a stronger nonbank sector is only good news for an industry that needs help now to combat a weakening housing market and a complex regulatory layer.
Royle added that advisors tend to help customers as well. He cited the case of his own client who searched for his first home at 85% LVR.The client’s own bank did not provide a loan, but a non-bank offered his 7.75% We intervened and the loan was secured.
Mr Royle said examples like this show there is reason for optimism despite the economic slowdown.
“The fact that a company like Resimac can offer lower floating rates than ANZ speaks to their confidence,” he said.
And he believed the mortgage advice industry could use these moments of hope to bring advisor penetration into the New Zealand market closer to the much higher levels applied in Australia and the UK.
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https://www.goodreturns.co.nz/article/976521162/advisers-can-ride-on-non-bank-coat-tails-says-broker.html?utm_source=GR&utm_medium=rss&utm_campaign=Advisers+can+ride+on+non-bank+coat-tails+says+broker Advisors can ride non-bank coattails, broker says