As sub-aggregator expands its panel, risk must be weighed up with reward
Like many players in the mortgage finance space, national brokerage network MoneyQuest recognises the vast untapped potential of commercial lending.
While brokers are fast approaching an 80% share of the residential mortgage market, they remain relatively underexposed in the commercial space, with an estimated 30-40% of commercial loans currently written through brokers.
But the market is rapidly maturing, with the latest data from the Mortgage and Finance Association of Australia (MFAA) showing a 24.2% year-on-year increase in the number of mortgage brokers also writing commercial loans (as of September 2024).
So it comes as no coincidence that a recent addition to MoneyQuest’s lender panel was aimed squarely at taking advantage of this growing market.
Breaking the mould
“The MoneyQuest brand has previously been synonymous with residential lending, but we want to break out of that mould now and be a full, diversified offering,” Adrian Fisher (pictured), MoneyQuest’s general manager, business development, said in a discussion with MPA.
Perhaps unsurprisingly, parent aggregator LMG has also made a lot of noise about diversification in recent months. But it is also a broader reflection of how the broking industry is evolving.
“A broker who just writes residential lending is really leaving themselves at risk,” said Fisher. “In times where the residential market is subdued, it leaves them quite vulnerable, whereas diversifying into commercial, equipment and asset finance gives them a lot more resilience in their business and revenue models.”
As an intermediary between broker and lender, it is MoneyQuest’s job to ensure it is bringing the right funders to the table to serve these needs. The onus is on MoneyQuest to present reputable and reliable funders, while also offering the right mix of products to satisfy customers.
This can be a fine balancing act for any aggregator or sub-aggregator, particularly when dealing with private lenders.
Because of their oft-times opaque funding structures and lack of observable track record, private lenders rarely make it onto an aggregator’s panel. But this can create a situation where brokers are not adequately serviced by the selection of funders available to them.
And while brokers can request to go "off panel" to deal with a private lender, it is fraught with risk. Brokers must do their own due diligence on the lender, as they won’t have an aggregator’s insurance safety net to fall on.
Fisher mentioned first-hand accounts of private lenders collecting upfront fees from brokers only to disappear; sadly, it is not an uncommon story.
In an ideal world, Fisher would rarely encounter a broker requesting to go off panel, “because we’ve got a panel sufficient enough of quality, reputable businesses that should be able to provide the solutions”.
While not always the case, the latest addition to MoneyQuest’s panel had that goal in mind.
Responding to demand
Announced in late July, Aquamore’s partnership with MoneyQuest was in response to increasing demand from brokers for unregulated private lending options.
The addition aims to support brokers with larger-ticket loans ranging from $5 million to $10 million.
“Private lending has grown significantly over the past few years, driven by tighter credit policies and market demand for alternative finance solutions,” Fisher said.
“Increasingly, businesses are motivated by speed to funds, structured strategically. Aquamore’s consistent and transparent approach aligns with our commitment to supporting brokers with reliable lending solutions."
According to Fisher, Aquamore’s funding structure helped seal the deal for MoneyQuest.
“Having institutional-backed warehousing is actually seen by not only us as an aggregator, but also by brokers, as a more stable funding environment that pushes up the credibility of a lender in this space,” he said.
Evolving the role of private lenders
Darren McLeod, Aquamore’s head of broker enablement and partner relationships, believes that the role that private lenders play in the broking space is also maturing.
“Once upon a time, private lending was always the last choice… Now, private lending has become that first step in a longer strategy,” he told MPA.
Read more: Non-banks versus private lenders: Know what you're dealing with
McLeod is under no illusion that the products offered by Aquamore are long-term solutions. By his estimates, the average loan time at Aquamore is around 11 to 11.5 months, at which point the borrower will refinance with a traditional lender or major bank.
But while private lending may not be the whole solution, “we are that very first step”, said McLeod.
He stressed that equipping brokers with the knowledge and skills to navigate the complexities of private lending is essential. It’s vital for brokers to understand not only where private lending fits within a client’s broader financial journey, but also how to guide clients through each step.
“It’s not just making it about the transaction, but making it about the relationship,” he said, highlighting the importance of fostering long-term client trust and delivering value beyond a single deal.
True, as a trade off for onboarding riskier clients, private lending solutions are invariably pricier than traditional finance routes. But rate is only one piece of the funding puzzle. McLeod stressed that while clients “may have to pay a little bit more up front”, they are getting money to expand their business sooner rather than later.
Businesses can also make deductions and add backs of borrowing costs and paid interest. “If they're getting money to expand, grow, generate new revenue, why pass on the money to the tax office? Why not utilise those costs in expenses?” said McLeod.
These are the conversations a decent broker should be having with all of their clients. But to have those conversations, a broker must not only have great product knowledge, but a diversity of lenders to work with.
It’s up to the aggregators to read the room and act accordingly.
