With an increasing number of property contracts mandating the use of a deposit bond provider with a minimum credit rating of A+, the Melbourne-based company claims that such dealing is becoming an increasingly popular choice among brokers.
Deposit Assure director Etienne Rizzo told Mortgage Business that the company has experienced a six-fold increase in enquiries since its inception in 2015.
He claimed that the company’s systems have “coped well” with the growth, with bonds still approved within three hours of receiving applications.
“We have capacity to service significantly more applications without impacting turnaround times,” the director said.
The three-year-old deposit bond provider is in the process of finalising aggregation agreements with six broker groups in Australia, and it plans on demonstrating its value proposition to all industry aggregators over the coming six months.
“Deposit Assure has enjoyed some incredible relationships with mortgage brokers in our industry, and we are looking forward to providing an incredible service [to] the broader industry,” Mr Rizzo* said.
Meanwhile, Sydney-based Deposit Power has reportedly been forced to close shop following the placement of Auckland-based CBL Insurance into interim liquidation by the High Court last month.
According to the Australian Financial Review, CBL has not yet informed Australian liquidators whether Deposit Power will fully or partially back the bonds, and an estimated 10,000 residential, commercial and property investors could be impacted by the insurer’s collapse.
“There are fears that the status of existing deals — which used the deposit bonds as a form of bridging finance for up to 48 months — could be jeopardised by the collapse of the insurance company,” the AFR report stated.
Independent building warranty provider Stamford Insurance has stepped in with a new scheme to protect CBL clients and “prevent the situation [from] spiralling out of control”, the New Zealand Herald has reported.
In a statement, Stamford said that the scheme aims to protect buyers and home owners in New Zealand, though it is yet to clarify whether the scheme will extend to those in Australia.
For buyers who have signed a contract and paid a deposit, and where construction is yet to begin, Stamford said that it will cover the risk that they may lose their deposit if their builder becomes insolvent.
If construction has already commenced, the building warranty provider will protect against builder insolvency and provide 10 years’ defects cover upon completion; and for home owners who have taken possession of their homes in the last 12 months, and have lost their protection against major defects arising with their home, Stamford will offer them a new 10-year policy.
*Quotes have been updated to attribute Deposit Assure director Etienne Rizzo.