Mortgage brokers are currently showing themselves to be the strongest lead generators for limited recourse borrowing arrangements (LRBA), a senior Westpac executive has said.
“What are we seeing in terms of applications? We’re seeing very strong growth out of mortgage brokers. We’re spending a lot of time across both the Westpac and St George brands engaging with our mortgage broker network, with more and more mortgage brokers seeing this as a key opportunity to engage with customers,” Westpac head of SMSF trustee distribution Sinclair Taylor said.
Taylor said the banking group had also noticed an appetite from consumers wanting to find out more about LRBA strategies.
However, due to the sensitive nature of the current LRBA environment, he said Westpac was mindful of ensuring mortgage brokers knew what service they were able to provide under the law.
“We’re really keen to address with them what are the rules dictating how far they can go,” he said.
“We talk about the basic functionality around the loan. They certainly can’t recommend SMSFs as a structure, they certainly can’t recommend that someone borrows in terms of their investment strategy because that’s where the role of the adviser comes in.”
He said he was also noticing people being better prepared when entering into a discussion about LRBAs. However, he was quick to point out it did not dull the importance the bank placed on continually trying to raise trustee knowledge on the subject.
“We’re focusing on the education needs of mum and dad trustees to make sure they really understand what the journey is they need to go through to get a loan in this space because it would be fair to say it is much more complex than any other type of investment loan.”
He stressed trustees still needed to get good advice up front before entering into an LRBA transaction.