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Non-bank mortgage investments

Elizabeth Moran looks into non-bank mortgages, the different funding methods available and how they will fare in the COVID-19 crisis.

Non-banks, specialising in mortgages, have flourished in recent years, along with the property market, low unemployment and a significant cost advantage over traditional banks with little or no retail presence. They’ve provided competition without many of the constraints.

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IMPORTANT: This information is general financial product advice only and you should consider the relevant product disclosure statement (PDS) or seek professional advice before making any investment decision. Product disclosure statements for financial products offered through InvestSMART can be downloaded from this website or obtained by contacting 1300 880 160. You should consider the product disclosure statement before making a decision about a product. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

* InvestSMART's capped Investment Fee (capped at $451p.a.) does not include fees charged within any ETF held in this portfolio, estimated to be approximately 0.18% (indirect cost ratio). Brokerage costs are not included in this calculation. For more information about fees and costs, please see the Product Disclosure Statement and Investment Menu.

# InvestSMART Portfolio performance figures are after investment and admin fees excl. brokerage and assuming dividends re-invested and no withdrawals. The peer comparison figures have been sourced from Morningstar data and is therefore limited to the funds and investment products included in their database. This may not include all funds available for retail investment in Australia. The peer calculation is inclusive of admin and investment fees; excludes brokerage and no withdrawals have been made. InvestSMART cannot determine whether or not franking has been included, nor if dividends have been reinvested. Historical performance is not a reliable indicator of future performance.

^ Only funds and investment products included in the Morningstar Australia database are available for fee and performance comparison. This may not include all funds available for retail investment in Australia. Only funds with > three year returns were included in any fee comparison, and were compared to Morningstar's nominated benchmark. Fees are calculated by Morningstar as the average over 10 years. Whilst every care has been taken in producing these numbers, InvestSMART does not guarantee the accuracy of the figures produced in the table. Fee data may not include all costs being charged such as platform and adviser fees. For the effect of fees on your cumulative returns, please see our report How Fees Can Destroy Your Wealth.

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Summary | 23 Annotations
Non-bank
2020/04/11 22:47
flourished in recent years
2020/04/11 22:48
a significant cost advantage over traditional banks
2020/04/11 22:48
Few non-bank mortgage businesses survived the GFC
2020/04/11 23:31
do not hold a banking license,
2020/04/11 23:31
d follow a consumer credit code.
2020/04/11 23:32
deposit guarantee
2020/04/11 23:32
APRA has powers to restrict payments and force banks to retain capital.
2020/04/11 23:32
a 7.25 per cent in
2020/04/11 23:34
self-employed borrowers have difficulty getting bank finance with inconsistent cashflows.
2020/04/11 23:34
r ‘non conforming’ or ‘low doc’ l
2020/04/11 23:35
insurance (LMI
2020/04/11 23:36
Non-banks can bundle mortgages into a special purpose trust and then sell pooled investments to the wholesale marke
2020/04/11 23:36
s (RMBS).
2020/04/11 23:36
RMBS
2020/04/11 23:37
FirstMac
2020/04/11 23:38
t $189 million across RMBS tranches
2020/04/11 23:38
nearly 200 per cent in
2020/04/11 23:38
2019 as in
2020/04/11 23:38
: pooled and contributory. I
2020/04/11 23:39
I
2020/04/11 23:39
The current crisis still has a long way to play out
2020/04/11 23:40
Non-bank mortgage businesses failed during the GFC.
2020/04/11 23:41