Nano is reaping the benefits of its digital home loan application model as long processing times and Covid outbreaks offshore blow out bank mortgage applications.
The online lender has hit the $100m mark on loans, just a month after launching.
Nano is targeting refinancers at present but will be taking aim at first-home owners in the coming months, hoping to capitalise on the trends from recent weeks.
Nano CEO and co-founder Andrew Walker said the speed at which the lender has been able to expand its loan book revealed its potential to disrupt the profitable Australian mortgage market.
“The industry is using old technology and is linear. You sit in front of a broker or lending manager. They do a fact find, It goes into one of the lenders, someone approves it. The process hasn’t changed in 40 years,” he said.
The red-hot housing market is adding pressure, with borrowers often facing 30-day settlement deadlines.
Westpac revealed in May that processing times for self-employed borrowers had blown out to 36 days.
Mr Walker, a former Westpac banker, said the delays suggested untapped demand.
Nano launched its new home buyer mortgage products in October.
“You start with the stuff that’s easy to do. Refinancing is inherently easier than a new purchase,” he said.
Nano draws its funding for lending from several wholesale sources, including the big banks against which it plans to compete. None of its funding is sourced internationally.
The lender is chasing safe borrowers, with a 75 per cent average loan to value ratio.
Mr Walker said most borrowers were salaried couples with combined incomes around $150,000.
Nano is not targeting the mortgage broker sales channel through which many borrowers now seek finance.
“They do offer a good service that comes at a cost. Our business we can remove the complexity,” he said.
“If we can make that a 10-15 minute process then we’re actually offering a really viable channel.”
Mr Walker said Nano was currently getting a 15-18 per cent conversion rate on customers who started the application process.
“That demonstrates our digital marketing team are getting quite a good breadth coming through,” he said.
Originally published by David Ross, 9 August, 2021, Full article here