Almost a quarter of borrowers have been turned down by a main bank within the last two years, and almost 40% of those rejected didn’t know about alternatives to main banks, according to non-bank lender Pepper Money.
37% of Kiwis may be missing out on home ownership because they are not aware of their options, general manager mortgages and commercial lending Aaron Milburn told NZ Adviser. Since Pepper Money launched in New Zealand last year, Milburn says it has managed to help broker customers with three different options and credit policies, which has opened up significantly more paths to home ownership.
“What we do differently is we don’t just have one monoline product with a monoline credit policy,” Milburn explained.
“We have three opportunities to help a family, and three different credit policies – prime, near prime and specialist. That’s really important, given the amount of Kiwis that could get a home but don’t because they’re not offered one through a non-bank.”
“The advent of positive credit scoring in New Zealand has forced advisers to look outside the main banks when they say no,” he continued.
“That customer’s credit profile might be 100% clean, but they might have been a few days late paying a credit card twice in twelve months, and that’s them disqualified from being able to get a major bank loan.”
Milburn says a non-bank offering should be a go-to for those who don’t fit main bank criteria – such as those who are self-employed, or have had credit issues in the past.
“There used to be a phrase in the industry – a ‘vanilla deal.’ I’ve never seen a vanilla deal in the ten years that I’ve been in the third party space,” he stated.
“Everyone is different. Every Kiwi family is different, and they have their own needs. They could be self-employed, they could be PAYE – and we’ve got a solution for them.”
Pepper Money offers advisers the use of its product selector, which asks fourteen questions and provides an indicative offer within two minutes. Milburn says this provides brokers with proper assurance that their customer can get a solution, while statistics indicate that customers generally walk away when turned down by a main bank.
“What we’ve done in New Zealand is made education a cornerstone of our offering, and we’ve put the technology into place to help brokers help more Kiwi families,” Milburn said.
“Brokers can find us through their aggregator groups, and we’re bringing new partners on as we’re rolling out through the country.”