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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Beware Shadow banks grab market share with big borrowing savings for property buyers

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Shadow banks grab market share with big borrowing savings for property buyers

Australian Financial Review 12 Dec 2018 3:19 PM

Duncan Hughes


Shadow banks are grabbing property market share from the majors with rates nearly 80 basis points cheaper and faster loan approval, analysis of rates and conditions shows.

The banks, which are not authorised as deposit-taking institutions, are growing at 2½ times than their rivals but still account for only 9.5 per cent of the mortgage market, according to analysis.

The regulation-light sector has avoided most of the consumer fall-out from the banking royal commission and restrictions imposed on the majors by prudential regulators, such as caps on lending and pressure to intensify scrutiny of borrowers' income and spending.

They have also shown a greater risk appetite by continuing to target low-documentation borrowers, who are typically self-employed or small business owners that do not have access to pay slip records, or financial statements and tax returns required to obtain a traditional mortgage.

Shadow banks are offering standard variable, interest-only investment loans 79 basis points lower than the majors, based on a borrower with a 20 per cent deposit seeking a $1 million loan, according to Canstar, which monitors rates and charges.

The discount gap has widened between the majors and shadow banks in the coveted principal and interest, owner-occupied sector, where risk-averse majors have been competing hardest for new business.

The difference narrows to 34 basis points between shadow banks and credit unions and mutuals, which are non-major authorised deposit-taking institutions (ADIs).

But shadow banks are also offering lower rates than the non-major ADIs across all mortgage lending categories.

Steve Mickenbecker, Canstar group executive, expects rising US interest rates will put pressure on shadow banks' funding costs and likely result in rate increases.

"But they are low-cost models and continue to maintain an advantage over their rivals," Mr Mickenbecker said.

Mortgage borrowers are also 2½ times more likely to have their loan approved by a shadow bank than a major competitor, according to analysis by Digital Finance Analytics.

The gap in approvals has been widening since February when the banking royal commission damaged the majors by exposing bad practices, leading to tightening of practices, particularly for the big four lenders.

But the growth in market share can be traced back to early 2016 when macro-prudential controls were imposed to slow lending and price rises, particularly by investors.

Shadow banks are also being boosted by private equity or hedge funds, such as giant US private equity, alternative asset management and financial service Blackstone Group's recent takeover of LaTrobe Financial Services.

More non-ADIs are being recruited onto the lending panels for the major mortgage broker networks because of increased borrower demand for cheaper rates and discounts.

For example, Bluestone, which specialises in near-prime residential lending, has been appointed to Mortgage Choice, the nation's third-largest broker network. Near-prime refers to lending to those who may have poorer credit histories and are at a greater risk of default than with "prime" lending.


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