Mortgage platform to chase low-deposit borrowers

Mortgage marketplace Joust has launched an equity crowdfunding campaign with the goal of raising a minimum of $700,000 and up to $2 million.

Speaking to Mortgage Business, founder and managing director of Joust Mark Bevan noted that the equity raised would be used to fund the mortgage originator’s domestic and international growth ambitions, with Mr Bevan revealing that Joust is in “advanced talks” with New Zealand-based parties looking to replicate the business model.  

“Approximately half of the funds raised will be earmarked for marketing and advertising to scale the business here in Australia,” the MD said.

“The other half is a split between technology development plans we’ve got for other products beyond home loans, exploration of potential opportunities to replicate the Joust business model in overseas markets, and to build out our team and reduce some key person risk within the business, and add some broader skill sets.”

Mr Bevan also revealed that Joust plans to broaden its platform to borrowers with loan-to-value ratios (LVR) of over 80 per cent. 

“Our initial target audience was the high-credit quality, prime consumer, and we’ve had an excellent response from prime consumers, which has been our target audience,” the MD said. 

“However, we continue to get some interest and inquiries both from the banks on the supply side and from customers around potentially pushing out our LVR ratio maximums.

“At the moment, 80 per cent LVR is the maximum to be able to deal with Joust, but that would be one of the enhancements that we’d look at — potentially pushing that upwards so we can help more Australians.” 

Further, Mr Bevan told Mortgage Business that recent scrutiny of the mortgage industry from the financial services royal commission could present Joust with an opportunity to further highlight the value of its offering.

“Our internal view is that the royal commission will highlight significant concerns around a lack of transparency and a lack of real competition, and they are the key areas of focus for the Joust business model in terms of bringing significantly greater transparency and making it easier for consumers to actually obtain real competition tension,” the MD added.  

The move comes following research from RateCity which found that the number of lenders offering low-deposit home loans has dropped by 44 per cent in the past three years.

According to rate comparison website RateCity, 32 per cent of lenders on its database offer mortgages with a maximum loan-to-value ratio of 95 per cent, down from 76 per cent in 2015.

RateCity spokesperson Sally Tindall noted that borrowers who typically sought low-deposit loans to break into the housing market may be faced with new challenges amid tighter credit restrictions and reduced appetite for small deposit loans from the Australian Prudential Regulation Authority.

“For Australians battling to crack into the highly competitive home loan market, low-deposit loans have been a doorway in. But the rules have changed and now borrowers that might have been given the green light three years ago are starting to be turned away,” Ms Tindall said.

Ms Tindall observed that while buyers could have previously paid 5 per cent on a home loan (giving the example of $25,000 on a $500,000 mortgage), they are now required to pay an additional $75,000 in order to qualify for the same loan.

[Related: S&P flags risks of reduced access to refinancing]