Blogs - Finance & Mortgage Solutions

You’ve probably noticed that house prices in Australia consistently outstrip growth in wages. But by how much? And what can you do to make sure you’re not forever chasing the great Australian dream?

Each generation faces its own unique set of challenges (and opportunities!).

And for the current crop, one big challenge can be breaking into the property market. Especially when you’re competing against older generations that have had at least a decade (or two, or three) headstart on the property ladder.

That’s not to say it can’t be done. Far from it. But it does require good planning, discipline, and motivation to stick to a plan.

Because historically speaking, and as you’ll see below, the longer you leave it, the harder it is to keep up.

How much have house prices grown compared to wages?

Over the past year there was a 2.2% annual increase in the Australian wage price index (WPI) – just short of the decade average growth of 2.4% – according to the Australian Bureau of Statistics.

Meanwhile, Australian housing values have jumped by more than 20% over the past year.

But hey, that’s just one year – and an absolutely bonkers year at that.

Let’s look at the trend over the past two decades to give us a clearer picture.

Over the past 20 years, wages have increased 81.7%, while Australian home values have grown 193.1%, according to this CoreLogic cumulative growth graph.

And here’s a state-by-state breakdown. As you can see, Tasmania has the biggest disparity between wages growth (79.6%) and house price growth (294%), followed by ACT, Victoria, NSW and then Queensland.

What does this mean for your next property purchase?

In short? It’s becoming tougher to save for a house deposit.

In the year to October, a 20% deposit on the median Australian dwelling value has increased by $25,417 to a total of $137,268, according to CoreLogic.

“With wages increasing just 2.2% in the year to September, it is difficult for household savings to keep up with this kind of increase,” explains CoreLogic’s Head of Research Eliza Owen.

“This tends to lead to less demand from first home buyers through periods of rapid property price increase.

“Another important implication of high house prices relative to subdued wages growth is lower purchasing power when it comes to mortgage serviceability over time.”

So what can you do about it?

Well, besides demanding a big pay rise from your boss, rest assured there are a number of options at your disposal.

For first home buyers, most states offer grants and stamp duty concessions/exemptions to help give you a leg up.

There’s also a number of federal government options, including the popular First Home Loan Deposit Scheme and New Home Guarantee initiatives, which on average enable first home buyers to make their home purchase 4 to 4.5 years sooner.

That’s right – 4 years sooner!

Then there’s the First Home Super Saver scheme, which allows you to save money for a first home inside your superannuation fund, which helps you to save faster due to the concessional tax treatment that super offers.

And for those of you looking to purchase an investment property, rest assured that there are ways to leverage the equity in your existing property to help you grow your portfolio.

So if you want to become less dependent on your annual wage for your wealth and retirement, and more invested in property, get in touch today.

We’d love to sit down with you and help make a plan to suit your current situation.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Whether you’re looking to buy, sell or hold, there’s a good chance you’ve wondered whether the property market will tumble when interest rates rise, right? Today we’ll look at what happened to house prices when interest rates were hiked in the past.

Past performance does not predict future results – we’ve all heard that before.

But it’s also said that an understanding of history can help us prepare for the future.

So with all the recent talk of the Reserve Bank of Australia (RBA) increasing the cash rate in 18 months (or so), and fixed rates already going up as a result, now’s an important time to look at what has happened to property prices when interest rates rose in the past.

What does history show us?

History suggests that interest rates do not force property markets into booms or busts, rather it’s often affordability, local economic conditions, consumer sentiment, or access to lending that does, according to a Property Investment Professionals of Australia (PIPA) analysis.

The PIPA analysis looks at the six periods of increasing cash rate movements since 1994, and the corresponding national house price movements, which we’ve summarised below:

June 1994 to December 1994: Cash rate increase: 2.75%. House price increase: 1.1%.

September 1999 to September 2000: Cash rate increase: 1.50%. House price increase: 7.5%.

March 2002 to December 2003: Cash rate increase: 1.00%. House price increase: 35.7%.

March 2006 to December 2006: Cash rate increase: 0.75%. House price increase: 8.4%.

June 2007 to March 2008: Cash rate increase: 1.00%. House price increase: 8.9%.

September 2009 to December 2010: Cash rate increase: 1.75%. House price increase: 10.5%.

So what can we take from those figures?

Well, for starters, for those holding out for a cash rate rise in the hope of buying during a price dip, history is not on your side – not once did house prices fall during the above periods.

PIPA Chairman Peter Koulizos says the strength or weakness of property markets is often influenced by more than just cash rate adjustments.

“There has been much conjecture over the past 18 months that record-low interest rates are the singular reason why property prices have skyrocketed, when the cash rate was already at a former record low of 0.75% before the pandemic hit,” Mr Koulizos pointed out.

“There are clearly a number of factors at play, including some buyer hysteria I’m afraid to say, but one of the main reasons for our booming market conditions is easier access to credit, which was simply not the case two years ago when rates were also low.”

Most borrowers can also afford a rate rise: RBA and PIPA

The RBA doesn’t seem overly concerned about borrowers being able to afford their mortgages when the cash rate rises.

RBA assistant governor (economic) Luci Ellis recently told a parliamentary committee that the majority of borrowers were paying off more of their home loans than required by their contracts, particularly during COVID.

“People have been socking away money in offset accounts and redraw accounts during this period. And particularly where you had lockdowns, some people were not spending as much as they ordinarily would,” Dr Ellis explained.

“If and when rates do eventually rise, a lot of people will not actually need to raise their actual repayment, because they’re already paying more than they need to.”

It’s a sentiment shared by Mr Koulizos: “While we don’t expect rates to rise for a year or two yet – and when they do, they are unlikely to ramp up rapidly – the monthly mortgage repayments on an (average) $574,000 loan may increase by about $73 per week if the interest rate increased one percentage point.”

Get in touch if you’d like to know more

The moral of the story? You don’t have to sit around and wait for a cash rate increase to make your next move.

If you’re looking to crack the property market with your first purchase, get in touch today and we can run you through a number of government schemes that can help make it easier for you.

And if you’re already a homeowner and are concerned about what an increase in the cash rate might mean for your current mortgage (or next purchase), we’d be happy to run you through a number of options available, which could include fixing your rate, or putting extra funds into an offset account in advance.

When you pay a supplier or service provider, are you certain you’re paying the right account? You’ve got to be super careful these days, as scammers are compromising inboxes and requesting payments to a new account. Here’s how to protect your business and its customers.

It’s Scams Awareness Week 2021, and over the past year scams have hit Australian businesses hard, resulting in $128 million in losses.

And as alarming as that is, one-third of people who are scammed never tell anyone, so the true numbers are probably much higher.

So what scam is catching out businesses this year?

Perhaps the most dangerous scam this year is “spoofing”, which involves scammers compromising a business’s email correspondence by imitating either your, or your customer’s, email account or website.

The scammers then email you, or your customers, requesting that payments be made to a new account for all future invoices.

The unsuspecting business or customer then makes the payment – in this example $10,000 – not realising they’ve paid the scammers. This not only costs the victim money, but disrupts business cash flow and operations too.

How to pay and receive with confidence

While spoofing is on the rise, there are some simple steps you can take to make sure your business and its customers are sending money to the correct account.

“If you have staff, talk to them about this scam to make them aware of how it works and what to look for if they are targeted,” warns small business ombudsman Bruce Billson.

Small businesses are also being encouraged to register for PayID, use BPAY, or implement e-invoicing when paying or receiving payment for invoices to help beat scammers.

That’s because these payment services will show who you’re paying before you pay, ensuring money is going to the intended account.

“PayID for example is a unique feature that will help prevent scams for individuals and businesses,” explains Australian Banking Association CEO Anna Bligh.

“Unlike paying to a BSB and account number, PayID gives the user the ability to confirm the name of the account holder before you transfer your funds.”

And the good news is that PayID is easy to register for and use.

So far, there are more than 8 million PayID’s registered across Australia, many of which are for businesses.

“As banking becomes more digitalised, no longer do customers prefer to sign a cheque or pay with cash. As a result, we all need to be more cautious about scammers and utilise services that ensure our money is being sent to the right business or individual,” Ms Bligh said.

Other steps you can take to protect your business from scammers

Other steps to protect your business from scammers are to use services such as two-step authentication where possible, and double-check the authenticity of webpage links before you click.

“These are easy and simple steps to protect yourself from these very costly and abhorrent scams,” says Alexi Boyd, Chief Executive Officer at the Council of Small Business Organisations Australia.

And last but not least, if you ever have any doubts about whether you’re making a payment to the right account, or if you receive a request to change payment account information, simply pick up the phone and speak to your contact at that organisation.

Open banking is here and it’s charging full steam ahead. So just how are lenders and fintechs using your shared data in this brave, new, data-fuelled world? A new report has shed some interesting insights.

With all that’s gone on over the past two years, one of the nation’s biggest banking overhauls in recent memory has slipped under the radar.

It’s called ‘open banking’, and it aims to allow you to easily and securely share your banking data with your bank’s competitors to make it more convenient for you to switch banks when you think you’ve found a better deal on a financial product.

For example, instead of spending hours and hours gathering documentation (such as bank statements, expenses, earnings and identification documents) to refinance your home loan, you could simply request that your current bank sends the info across for you.

But, like most things, it comes with a trade-off: you’ve got to share your banking data with the prospective lender, fintech or allied professional to make it happen.

So just how do they use your data?

Australian open banking provider Frollo has just published the second edition of its yearly industry report, The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintechs, technology providers, and brokers across the country.

The report shows open banking data availability has accelerated dramatically.

In the first 10 months of 2021, 70 banks started sharing consumer data and 14 businesses became accredited data recipients – including three of the four big banks.

This is an increase from just five data holders and five data recipients in 2020.

And more financial institutions are getting ready to jump on board.

The industry survey shows 62% of respondents plan to use open banking data within the next 12 months, and 38% within the next 6 months.

So what are they using the open banking data for?

Well, the most popular uses can be grouped into three categories:

– Lending: income and expense verification is highly valued by 59% of survey respondents.

– Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents.

– Verification: customer onboarding (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued.

For open broking, get in touch

Now, it’s important to note that open banking isn’t the only way you can make life easier on yourself when it comes to switching up financial products.

That’s what we’re here for!

We’re an open book – always happy to check whether you can apply for a better deal on your home loan somewhere else.

And as you know, we pride ourselves on taking on the vast majority of the legwork, whether we’re harnessing the power of open banking or not.

So if you’d like to explore your options, get in touch today – we’d love to help you out!

Mortgage holders are facing a sooner-than-expected cash rate rise after the Reserve Bank of Australia (RBA) revised its outlook due to the economy bouncing back strongly from the Delta outbreak. So just how soon can we expect a rate rise?

As widely predicted, the RBA on Tuesday kept the official cash rate at the record low level of 0.1% for the 12th consecutive month.

But it was the wording in the RBA’s monthly statement that really caught the attention of pundits.

For the first time in a very long time, the key phrase “will not be met before 2024” was not included when referring to scenarios that needed to occur to trigger an official cash rate rise.

And in a later webinar speech, RBA Governor Philip Lowe said it’s now “plausible that a lift in the cash rate could be appropriate in 2023”.

This isn’t completely unexpected

For months, economists from financial institutions around the country have called on the RBA to revise their targets, with some predicting the cash rate rise could happen as early as November 2022, including Commonwealth Bank and AMP.

That’s right – possibly less than a year away.

Now, we understand this will be a nervy period for some mortgage holders, especially the younger ones.

After all, more than one million homeowners have never experienced an official cash rate rise (the last rise was back in November 2010).

So rest assured we’ve got your back – we’re here for you if you have any questions or concerns about what rising interest rates could mean for your mortgage.

So why is the cash rate rise (possibly) being brought forward?

The RBA’s statement sums it all up pretty neatly, but here’s the CliffsNotes version: as vaccination rates increase and restrictions are eased, the Australian economy is expected to recover relatively quickly from the interruption caused by the Delta outbreak.

“The Delta outbreak caused hours worked in Australia to fall sharply, but a bounce-back is now underway,” explains the RBA.

Now, the RBA says it will not increase the cash rate until actual inflation is sustainably within the 2-to-3% target range.

However, inflation has already picked up to 2.1%.

The RBA insists it’s in no rush though, saying it expects any further pick-up in underlying inflation to be gradual.

“This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time,” the RBA statement says.

“The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth.”

What could a sooner than expected cash rate rise mean for you?

Well, the most obvious impact of a cash rate rise is that interest rates will go up, which means your home loan repayments might increase each month.

And that could have a flow-on effect for other parts of the economy, such as housing values, explains CoreLogic’s research director Tim Lawless.

“We are already seeing the rate of house price appreciation ease due to affordability pressures, rising stock levels and, as of November 1st, tighter credit conditions,” says Mr Lawless.

“Once interest rates start to lift, there is a strong chance that housing prices will head in the opposite direction soon after.”

So what can you do about it?

Well, that depends on your current financial situation.

If you’re a prospective first home buyer suffering from FOMO, or someone looking to upgrade over the next two years, don’t be disheartened by increasing property prices: now’s the time to start planning ahead.

Planning ahead involves understanding your borrowing capacity, your property goals, and your current expenditures – this can help you determine what changes you can make before you pull the trigger on a purchase.

On the other hand, if you’re a current mortgage holder, now could be a good time to reassess whether you should lock in a fixed interest rate.

Indeed, many lenders have recently increased the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans to head off the cash rate rise, and this latest statement from the RBA could trigger more rate hikes.

So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.

We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).

More than half of Australian house hunters spend the same amount of time inspecting a property as they do watching an episode on Netflix, according to new research.

We get it. You see a house you like and you immediately want to buy it, warts and all.

But take a breath, as FOMO can be costly - with a third of recent purchasers admitting to “buyers regret”.

Not doing your due diligence on a property can also have implications when applying for finance if the lender’s valuation doesn’t come in at what you expected.

And it turns out that a lot of house hunters are leaping before they look right now.

A recent survey of 1,000 property owners by lender ME revealed that 55% of house hunters spent less than 60 minutes checking out the property they eventually purchased, despite it being one of the biggest purchases of their lifetime.

That’s about the length of a standard 55 minute Netflix episode.

The impact of COVID-19

Turns out we haven’t just become better at bingeing during COVID-19.

COVID-19 has also reduced the time buyers have to check out properties.

But it’s not always the purchaser’s fault.

About two-thirds (65%) of recent buyers said “real estate restrictions impacted their ability to inspect and purchase their property”.

And surprisingly, almost half (45%) of buyers restricted by lockdowns admitted to doorknocking vendors to ask for an inspection on the sly, as well as looking at photos and/or videos of the property.

Hidden issues

The lack of inspection time led to around 61% of Australian home buyers discovering issues with their property after moving in.

Around 40% of this group said they missed picking up the issues because they “lacked the skill or experience in inspecting the property”, while 33% simply “fell in love with the property and overlooked them”, and 18% were “impatient and concerned by rising prices”.

Overall, the top post-purchase problems included construction quality (32%), paintwork (28%), gardens and fences (23%), fittings and chattels (21%) and neighbours (17%).

Among owners who identified issues:

- 34% experienced a degree of “buyers regret” following the purchase.
- 58% would have paid less for the property had they discovered the problems earlier.
- 84% spent money fixing, replacing or improving the issues identified, or have plans to do so.

The moral of the story? Emotions are always involved when purchasing a home, which can cloud your judgement.

“Give weight to any niggling hunches that give you cause for concern and get a professional property inspector to do the looking for you,” says ME General Manager John Powell.

“It is also important to know your borrowing capacity in advance so you can buy your home with full confidence knowing you’ve got solid financial backing.”

Get in touch to find out your borrowing capacity

As mentioned above, it’s important to know your borrowing capacity before you start house hunting so you don’t stretch yourself beyond your limits.

So if you’d like to find out what you can borrow - get in touch today. We’d be more than happy to sit down with you, take a breath, and help you work it all out.

We’ve all been guilty of the odd credit card mix-up from time to time – it happens! But if you’re consistently relying on a personal credit card to pay your business expenses – like 4-in-10 SME owners – then it’s probably time to explore other funding options.

The past 18 months have been tough for a lot of businesses around the country – I’m sure you don’t need us to remind you of that.

As such, 2-in-3 businesses (66.1%) are trying new funding options to help them build their way out of the pandemic, according to a poll of 1255 small businesses by SME non-bank lender ScotPac.

That’s a rapid rise from the start of 2021 when only 46% were introducing new funding.

The top three reasons SMEs have for seeking new funding sources are to buy plant and equipment (57.5%), improve cash flow (40.6%) and pay down debt (34.3%).

But one worrying stat caught our attention

When asked what new types of funding they had introduced over the past year to keep their business moving, more than half the SMEs (55.4%) said they turned to owner funds, with 42.5% relying on personal credit cards.

You know the old saying “you shouldn’t mix business with pleasure”?

Well, this is one of those times.

It’s very likely there are much more suitable options available for your business that will help you separate your business and personal expenses, and make it easier for you to forecast your cash flow – to name just a couple of good reasons.

“We’d encourage business owners, particularly if they are relying on personal credit cards, to seek professional advice about more sustainable funding options,” says ScotPac CEO Jon Sutton.

Other common (and likely more appropriate) types of new funding that SMEs have turned to over the past year include asset and equipment finance (38%) and government stimulus funds (27.6%).

Demand for invoice finance as a new source of funding has also more than doubled since 2018 to 16.3% – not far behind the percentage of businesses taking out a new overdraft (20%).

Want to explore new funding solutions for your business?

The SME finance space is constantly evolving – and we make it our business to make sure we stay abreast of the new funding options and players that can help your business.

So if you’re in need of finance for your business, but don’t know where to start, get in touch today.

We’d love to run you through the growing number of funding options available for SMEs just like yours.

Are the days of ultra-low fixed interest rates over? It’s looking increasingly so, with two major banks increasing their fixed rates this week. So if you’ve been thinking about fixing your mortgage lately, it could be time to consider doing so.

Do you know how when one tectonic plate shifts, others around it soon follow?

Well, in the past week, the Commonwealth Bank (CBA) and then Westpac hiked the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans by 0.1% (for owner-occupiers paying principal and interest).

Meanwhile, ING also lifted its fixed rates on 2- to 5-year terms by 0.05% to 0.2%.

For mortgage-holders, it’s a clear ol’ rumbling sign that the days of super-low fixed interest rates are coming to an end.

So why are banks increasing fixed interest rates?

The Reserve Bank of Australia (RBA) has repeatedly insisted the official cash rate isn’t likely to rise until 2024 at the earliest.

But it seems the banks don’t believe them. The banks think it’ll happen sooner.

CBA, for example, is currently predicting the RBA will increase the official cash rate in May 2023, while Westpac is predicting a rate hike in March 2023 – both well before the RBA’s 2024 timeline.

Given that’s about 18 months away, the major banks are now adjusting the fixed rates on fixed terms of 2-years and longer, in order to head off the expected rise in their funding costs.

“Lenders are scrambling to lift fixed rates before they start to feel the margin squeeze,” explains Canstar finance expert Steve Mickenbecker.

“Borrowers shouldn’t be so complacent as they must expect rises inside two years, and the closer they get to that point, the less attractive the fixed rates alternative will be.

“They may want to consider fixing their interest rate for three years or longer, while the going is still good.”

Variable interest rates cut

Interestingly, a number of the banks – including CBA and ING – simultaneously slashed interest rates on some of their variable-rate home loans this week.

And CBA even cut their 1-year fixed rate by 0.1% (for owner-occupiers paying principal and interest).

So why did they do this when (longer-term) fixed rates are going up?

Well, aggressively competing for customers on variable-rate mortgages (and 1-year fixed) makes sense for lenders when a cash rate hike is predicted to be at least 18 months away.

They can always increase their variable rates when needed, but they can’t do the same for borrowers locked in on longer-term fixed-rate mortgages.

So what’s next?

As mentioned above, when the big banks make a move, it’s not uncommon for other lenders to follow suit – as seen with ING this week.

So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.

We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).

If you’d like to know more about this – or any other topics raised in this article – then please get in touch today.

Almost 33,000 Australians bought their first home four years sooner thanks to two federal government schemes that give first home buyers a leg up into the property market. Could you, or someone you know, be eligible?

We love a feel-good news story around here.

And hearing that so many first home buyers got a leg up into the property market much sooner than they ever dreamed makes us feel pretty warm and fuzzy.

This week the federal government released figures on the popular First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG) initiatives.

The data showed that the two initiatives supported 1-in-10 first-time homeowners during the 2020-21 financial year.

And on average, the schemes allowed those first home buyers to bring forward their home purchases by four (FHLDS) to 4.5 years (NHG).

Hold up, what are these first home buyer schemes?

The FHLDS allows eligible first home buyers with only a 5% deposit (rather than the typical 20% deposit) to purchase a property without forking out for lenders mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

The NHG scheme is very similar but is only for new builds – such as house and land purchases or a land purchase with a contract to build.

Another key difference is that the NHG property price caps are higher (see here) to account for the extra expenses associated with building a new home.

So who’s using the schemes?

Mostly younger buyers!

According to the latest stats, 58% of all buyers under the schemes are aged under 30-years-old.

NSW (11,000 residents) and Queensland (9,000 residents) make up nearly two-thirds of the scheme’s recipients.

And it turns out that most first home buyers who secured a spot in one of the schemes used a mortgage broker (56%).

But for the NHG scheme specifically, brokers originated the vast majority of government guarantees (72%).

How to secure a spot

We’ve got good news. And a bit of not-so-good news.

The good news is that for the NHG, only 2,443 of the 10,000 spots had been secured as of October 6 – so there’s still the opportunity for eager first home buyers wanting a new build.

The not-so-good news is that spots in the FHLDS are almost full for the latest round released on July 1.

Figures show that 7,784 of the 10,000 spots have already been secured, and word is that participating lenders have waiting lists for many of the remaining spots.

That said, if you’re a single parent there’s a third, similar scheme called the Family Home Guarantee (FHG), which allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.

Only 1,023 of 10,000 spots have been secured in the FHG, for which you don’t need to be a first home buyer.

Last but not least, it’s worth noting that the FHLDS is an annual scheme with new spots expected to be available from July 2022 – and previously the federal government made a surprise announcement to release 10,000 additional spots in January.

So if any of the above schemes are of interest to you, get in touch with us today and we can run you through everything you need to know about them so that you’re ready to apply when the time comes.

While many SME owners worry about their access to finance, a surge of new lenders and products is rapidly expanding the options available. And brokers have an important role to play for businesses, says the Productivity Commission.

Changes to lending markets over the past decade mean there’s now a wide range of business finance options that don’t require property as security, according to a new report by the Productivity Commission.

However, a lack of awareness of these new finance options is one of the biggest hurdles preventing SME owners from accessing them.

This is where a broker with up-to-date market knowledge can play an important role for your business, explains the Productivity Commission.

“SMEs may not be aware of all their lending options and may not feel confident about new options. Brokers can help match them with appropriate lending options,” the Productivity Commission says.

“These options include borrowing against alternative collateral – such as vehicles, machinery and intangible assets (for example, invoices and other expected receipts) – and unsecured lending.”

Why are more SME finance options emerging?

Changes to prudential rules have made lending to SMEs less attractive for the major banks, but at the same time, created opportunities for new and established non-bank lenders, says the Productivity Commission.

This has resulted in a broader range of lending options beyond traditional property-secured loans for SMEs, especially with the emergence of fintechs and more accessible borrower data.

“Combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property,” adds the report.

However, while most SMEs are aware of banks as a source of finance, awareness of the newer options is more limited.

How we can help your business

As brokers, we’re constantly upskilling and learning to make sure we stay abreast of the finance options and players in the SME finance space.

“Brokers are expected to have current market knowledge and participate in ongoing training to stay informed about new lenders and products,” explains the report.

“For example, aggregators and industry associations hold various educational events – including conferences, workshops and webinars – to improve brokers’ understanding of SME lending options.”

And it’s for this reason that the Productivity Commission highlights the key role brokers can play for busy SME owners.

“By connecting borrowers to lenders, brokers can play an important education role, particularly for those SME customers that do not have the time or inclination to undertake detailed market research,” says the report.

So if you’re in need of finance for your SME business, but don’t know where to start, get in touch today.

We’d love to run you through the growing number of finance options available for SMEs like yours.