Outpacing the Red Queen with specialist lending

Brokers can move beyond running to stand still by working with specialist lenders that are stepping in to serve growing numbers of Australians whose financial situations don’t fit the standard mould

IF YOU feel that markets have slipped through the looking glass over the last month, you are not alone. Like Alice in Lewis Carroll’s masterpiece, mortgage brokers and lenders alike can be forgiven for pinching themselves when major banks go from predicting as little as one more central bank rate cut by August (in the case of ANZ) to as many as five by February 2026 (according to NAB) – including the possibility of a mega 50 basis points cut to shore up business and consumer morale. Even as consumer confidence fell in April on the back of tariff issues, and with business closure rates in sectors reliant on discretionary spending now above COVID levels, the prospect of lower interest rates than previously expected could add a tailwind to lending market activity. Borrowers are running to stand still in a surreal world where bad news on the economic front may end up lifting borrowing activity if policymakers can successfully steady nerves.

The self-employed segment continues to grow as working arrangements become more flexible. Government statistics show that the number of independent contractors increased by 10% in the year to August 2024. Likewise, the number of small businesses (employing fewer than 20 people) has also grown over the last few years. “Financial conditions in today’s economic environment can be restrictive for some households and businesses,” says Smith. “While many borrowers face challenges, self-employed individuals – including sole contractors, small business owners and gig economy workers – are among the most impacted.” Without the traditional payslips and employment history that mainstream banks prefer, these borrowers often struggle despite having strong businesses and income streams. “At Liberty, we recognise that all borrowers are unique when it comes to their income and financial records,” Smith says. “Our alt-doc solutions provide flexible options for those who may not satisfy traditional loan requirements.” This flexible approach includes alternative documentation options that better match how self-employed people track their income and financial performance. “We offer a diverse range of income verification methods, with non-traditional options considered including an accountant’s letter, six months’ BAS or six months’ business bank statements, making it easier for many borrowers to access the funds they need,” Smith explains.

Both lenders expect continued growth in the specialist lending sector, driven by changing work patterns and financial circumstances that leave more Australians outside the box of traditional lending criteria. “We see the specialist lending space continuing to grow and provide important solutions to customers that traditional lenders are unable or unwilling to help,” says MacRae. “Ensuring that broker and borrowers continue to have access to options and solutions and that a financial hiccup doesn’t lock a borrower out of the homeownership market is in Bluestone’s DNA.”

For mortgage brokers, the specialist lending sector represents both an opportunity and a challenge. Many brokers are experienced in dealing with straightforward applications but may need support to confidently navigate the specialist lending space. “Education is the key here,” says MacRae. “Bluestone is very focused on helping brokers grow their businesses through providing solutions for customers that many brokers had previously thought they couldn’t find lending solutions for.” Non-banks emphasise the importance of education and support for brokers entering this market segment. “At Liberty we understand that working with a broad spectrum of borrowers, such as those with complex financial profiles, can be unfamiliar territory for some brokers,” says Smith. “That’s why our focus remains on education and support, ensuring brokers are empowered with the knowledge and confidence to serve this growing segment effectively.” The potential business growth for brokers who expand into this space is substantial, according to Smith. “We help brokers expanding into this market understand the opportunities it presents,” he says. “Many self-employed borrowers, small business owners and non-traditional clients are financially strong but may not meet the rigid criteria of mainstream lenders. By broadening their scope, brokers can significantly grow their customer base while also unlocking cross-selling opportunities across different asset classes.”

As in many financial sectors, technology is playing an increasingly important role in specialist lending, though both Liberty and Bluestone stress that the human element remains critical. “Technology has a role to play in simplifying and speeding up the application procees,” says MacRae. “Bluestone is employing AI to automate the document verification process and helping to better understand the customer’s income and expenses.”

As a leading Australian non-bank lender, Liberty offers innovative solutions at competitive prices to support customers with greater choice. Over the past 25-plus years, this free-thinking approach to loan solutions has seen more than 700,000 customers get financial across a wide range of home, car, personal and business loans as well as SMSF lending and insurance products. Liberty remains the only non-bank lender with an investment-grade credit rating offering custom and prime solutions to help more people get financial.

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One type of borrower who is used to this kind of exhausting, confusing duality is the self-employed customer looking for consistency beyond the traditional banks for their financial needs. The February rate cut by the Reserve Bank of Australia brought a welcome boost to the specialist lending sector, with borrower interest rising. “The recent decision by the RBA to reduce rates has seen a lift in consumer sentiment, and in turn we have seen an uptick in application volumes,” says Tony MacRae, chief commercial officer at Bluestone Home Loans. “This, coupled with the overall growth in the specialist lending space, has meant it’s a good time to be a solutions-based lender that helps customers other traditional lenders don’t [help] or make too difficult [to help].” Similarly, longer-term trends in confidence have improved, with the Westpac-MI Consumer Sentiment Index showing a steady rise since the middle of last year to reach a three-year high in March – just shy of the ‘neutral’ level of 100 where there are the same number of optimists as pessimists. The ‘time to buy a dwelling’ component of the index was at 91.6 in the same month, nearly 14 percentage points higher year-on-year. Even the April reading for ‘time to buy’ was 85.7, still more than 10 percentage points higher than a year prior. But when the winds are hard to read, traditional banks can be quick to retreat, making it difficult for many Australians to secure financing through traditional channels, despite being in a financially sound position. Specialist lenders like Bluestone Home Loans and Liberty are finding opportunity in the confusion through their consistently flexible approach, which comes as growing numbers of self-employed borrowers seek flexible financing solutions. “In the currently volatile economic climate, there are even more customers who may not fit the credit appetites or policies of mainstream lenders,” says David Smith, Liberty’s chief distribution officer. “At Liberty, we take a holistic approach to credit assessment and consider each borrower’s individual situation, allowing us to support the growing specialist lending segment.” Smith notes that Liberty’s approach involves looking at each application on its own merits rather than applying rigid criteria across all borrowers.

David Smith

Liberty

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David Smith was appointed as Liberty’s chief distribution officer in January 2024. Strategy-driven with a customer-first ethos, Smith is responsible for the broader distribution platforms of the Liberty Financial Group, including its business partner relationships. Smith brings a wealth of knowledge and expertise to the company, having spent over 20 years in the financial services sector. He holds a Bachelor of Business (Hons) from Brunel University London and a Postgraduate Diploma in Marketing from the UK Chartered Institute of Marketing.

Liberty

David Smith

Tony MacRae

Bluestone Home Loans

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Tony MacRae stepped into the role of chief commercial officer at Bluestone in August 2023, bringing with him a wealth of experience in financial services. He spent a decade at Westpac Group, where he served as acting CEO of RAMS and led third party distribution at Westpac. Known throughout the industry for his ability to drive sales initiatives and strategic direction, MacRae excels at building partnerships and leading teams towards impressive business growth. At Bluestone, he is focused on empowering the company’s broker partners to better serve customers. In addition to his work at Bluestone, MacRae has dedicated the last 11 years to the Royal Flying Doctors Service South Eastern Section as a board member and treasurer. He holds a Bachelor of Economics from Macquarie University.

Bluestone Home Loans

Tony MacRae

Liberty

David Smith

“The current economic environment is meaning more customers are either earning income through non-traditional means or they have experienced short-term financial issues, and this in turn means that they are often locked out of traditional lending avenues,” MacRae adds. “That’s where lenders like Bluestone are able to find solutions and ensure these customers aren’t locked out of homeownership.” While some might assume that major banks would be eyeing this growing market segment, MacRae suggests mainstream lenders remain focused on more traditional customer profiles. “Banks largely continue to be focused on their bread-and-butter customers, either PAYG or well-documented self-employed,” he says. “Bluestone can provide customers varied ways of demonstrating income and greater understanding of the customer’s financial circumstances to provide solutions where others can’t.”

“In the currently volatile economic climate, there are even more customers who may not fit the credit appetites or policies of mainstream lenders”

David Smith, Liberty

The ability to look deeper into borrowers’ circumstances is becoming a key differentiator for non-bank lenders, particularly as more Australians find themselves with less straightforward financial situations. “Many non-bank lenders, like Bluestone, are solutions focused,” says MacRae. “That means we look further into the customer’s circumstances and more often than not find a way to help the customer.” This solutions-oriented approach is at the heart of specialist lending’s value proposition, and it’s one that appears to be resonating with an increasing number of borrowers.

Bluestone is not alone. A KPMG report on AI in finance showed that of 100 companies in Australia, 72% were now using AI in some form in their finance operations, with 35% using it to a ‘moderate to large’ degree. However, MacRae emphasises that technology should complement rather than replace the personal touch. “We should never forget that at the heart of what we do is relationships. A home loan is normally the largest financial decision a customer will make, and they like the ability to talk to someone and get options, advice and be provided with help and solutions.” Smith shares a similar perspective on the balance between technological advancement and personal service. “Like many industries, non-banks are accelerating towards AI and other technology advances,” he says. “Technology plays a crucial role in speeding up processes, reducing administrative burdens and improving decision-making. By leveraging data insights and automation, specialist lenders can provide more efficient services while maintaining flexibility.” Liberty’s approach aims to leverage technology while preserving the human expertise that borrowers and brokers value. “At Liberty, we embrace innovation with a clear goal of delivering a seamless experience for brokers and their customers. We strive to strike the right balance between technology and human expertise. That’s why we continue to invest in solutions that complement our highly skilled team,” Smith explains.

Bluestone Home Loans

Tony MacRae

Liberty

David Smith

Tony MacRae

Bluestone Home Loans

Tony MacRae

“Many non-bank lenders, like Bluestone, are solutions focused. That means we look further into the customer’s circumstances and more often than not find a way to help the customer”

Tony MacRae, Bluestone Home Loans

A growing market of self-employed borrowers

Finding solutions where others see problems

Published 05 May 2025

David Smith

Liberty

Established in 2000, Bluestone Home Loans is one of Australia and New Zealand’s leading non-standard mortgage lenders, backed by Cerberus Capital Management since 2018. Bluestone Home Loans specialises in providing home loans to the borrowers the banks often overlook and has helped over 50,000 borrowers buy, refinance or invest in property. Currently only accessible via a broker, Bluestone aims to be the go-to lender for brokers who have complex customers, making the application process simple, with fast assessment turnaround times.

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Smith emphasises that specialist lending has been Liberty’s focus from the beginning and remains central to its mission: “Specialist lending is our core capability at Liberty, and we’re proud to offer flexible solutions to those who are unable to be served by traditional lenders. To keep up with the expectations of customers, non-banks need to embrace the efficiencies and opportunities that AI and automation can offer.” He believes that the future belongs to lenders who can maintain flexibility while improving efficiency. “Non-banks like Liberty who take a free-thinking and flexible approach to each application are going to be able to meet the needs of more customers across various markets,” Smith concludes. In Through the Looking-Glass, the Red Queen tells Alice that, in her world where everything is reversed, “it takes all the running you can do to stay in the same place”. Brokers navigating today’s lending market must break out of the Red Queen’s thought prison – amid the confusing swirl of falling rates, shaken confidence and growing borrower demand, those who run to stand still risk falling behind. Specialist lending, with its flexibility and human-first approach, offers a path forward, helping brokers set their own course through the uncertainty.

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Beyond the Red Queen: growth and opportunity

Consumer confidence punctured?

Source: Westpac–Melbourne Institute Consumer Sentiment Index

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100

92.8

94.6

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Source: KPMG Global AI in Finance Report, December 2024

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