Brokers size up new super loans
Loan brokers are running the rule over the emerging market in structured loan packages for self managed superannuation funds, as they look for ways to supplement their dwindling businesses flows.
The wholesale finance group Seiza Capital has signed up a score of brokers to sell a product it launched three weeks ago, the Self Managed Super Fund Loan.
The long-standing ban on borrowing by superannuation funds was effectively ended last year when the Australian government amended the Superannuation Industry Supervision Act to clarify the position in regard to investment in internally geared derivatives such as instalment warrants.
The amendment went much further than expected and established the right of funds to borrow to invest in any asset that they would otherwise be allowed to buy outright.
Macquarie Bank, Babcock & Brown, Calliva Group, Quantum and Seiza have already come to market with a range of products that include loans and instalments - most of them providing commercial and residential property exposure in non-recourse structures.
Some are packaged as investment products and offered through product disclosed statements that will be sold by licensed financial planners.
Others are loans that may or may not be covered by the Consumer Credit Code. They can be sold by brokers.
The managing director of the loan broker Allstate Home Loans, Tony Shield, said his company had signed up with Seiza to sell the self managed super loan.
Shield said he was expecting a slowdown in mortgage sales and was looking for a change to Allstate's product mix. He said inquiry levels were high and that had prompted him to investigate the new product.
Mortgage aggregator Firstfolio has signed up with Calliva Group and will sell its SuperAccess property investment loan to self managed super fund clients.
Not everyone is convinced it is a great marketing opportunity. Peach Home Loans director Andrew Hunter said he had done "a little bit of work" on the product but had not considered taking up a distribution deal because inquiry levels were very low.
Seiza Capital director Simon Robinson said it would be a mistake to get too excited about the prospects for the product.
Robinson said: "It is a structured product that will involve a complicated sales process. The asset has to be held by a trustee. The super fund has to determine that its deed allows it to invest in this type of product."
A spokesman for Mortgage Choice, Warren O'Rourke, said the company had not made any decision to sell self managed super fund loans. He said the group had an open mind on the product and was still trying to get a sense of the likely demand.