Homeloans expands its non-conforming portfolio

Specialist mortgage lender Homeloans has reported good sales for a range of non-conforming loans it launched 12 months ago. Last week, the group added a new non-conforming product line.

Pepper is the funder of Homeloans' Accelerate range, which has been on the market for the past year. Resimac is the funder of the new range, FlexiChoice.

Greg Mitchell, general manager of sales at Homeloans, said: "There are some things that one product will do that the other won't."

The FlexiChoice range includes full-doc and low-doc loans, offset and redraw.

Mitchell described the loans it is writing through Accelerate and FlexiChoice as "near-prime".

"Thirty or 40 per cent of the applications we receive are from people who have defaults," he said

"We are not interested in the people who have missed a lot of payments. However, there are people who have had financial difficulty with a small business in the past or who had a default listing some time back but whose performance since then has been good.

"If someone has gone bankrupt we look at the reasons for that."

Rates for FlexiChoice loans start at 7.5 per cent and are adjusted according to the "severity of the conduct" of the borrower and the loan-to-valuation ratio. The risk-based pricing model includes a step-down for good payment history.

Mitchell said Homeloans has done good business with Accelerate.

He said he did not accept that the responsible lending provisions of the National Consumer Credit Protection Act made it too hard to offer low-doc or non-conforming loans.

"Even under the old Uniform Credit Code there was a requirement to act ethically."