Case study: solutions for more customers
Primed for near-prime
The recently launched Connective Solutions, funded by Pepper Money, is the first near-prime home loan product that we have offered through our white-label funding program.
We speak with Sam Yoong, managing director at Loan Hunter, about why there is a growing demand for near-prime lending and how he used Connective Solutions to assist a client with an adverse credit report.
Meeting the needs of a changing workforce
In the past, your typical borrower would have been a PAYG employee who has enjoyed a stable, single place of employment for several years. However, this has changed in recent times.
According to Sam, the demand for more flexible lending solutions aims to recognise and accommodate the changing dynamics of today’s workforce. “There are no set rules anymore. The means by which people earn an income is changing all the time so we will increasingly need more adaptive approaches to lending that account for each borrower’s personal circumstances,” Sam said.
“The introduction of a near-prime product into Connective’s white-label program is a smart move. I’m sure it will prove to be popular and help solve many tricky lending scenarios.”
A timely solution
While Sam has only written a relatively small number of white-label loans in the past, the launch of Connective Solutions could not have come at a better time for one client that approached him with an impaired credit report.
“My client is actually a medical professional and the type of borrower most lenders would welcome with open arms. The only problem is he has issues with his credit file which relate to tax matters. While it has now been resolved the record is still showing on his credit file, so no major lender will consider his application.
“Thankfully, Connective Solutions were able to look beyond this short-term issue and look at his broader circumstances, most notably his earning capacity and job security,” Sam said.
The rise of white-label
According the latest data from the MFAA’s Intelligence service, white-label lending increased by ~70 percent in market share over the five-year period from 2013 to 2018.
This growth doesn’t surprise Sam and he expects it to become even more prominent as the younger generations seek to enter the property market.
“While older borrowers have largely moved away from the notion of sitting down with their local bank manager when applying for a loan, they generally still like the comfort of going with a major bank and a brand they know.
“The younger generations on the other-hand aren’t nearly as concerned about having a household brand behind the funding. They want to know they are getting a sharp rate and that the product is suitable for their needs.
“And when you look behind the loan to see who is funding the white-label product it is usually a provider that the borrower knows and is comfortable with,” Sam said.