SMEs flock to non-conforming loans

Small business owners are putting their homes on the line and taking out mortgage loans sometimes exceeding 90 per cent of the homes' values. Analysts say these small business operators are driving mortgage lending growth and are increasingly abandoning traditional banks in favour of non-conforming lenders such as Liberty, Bluestone, Pepper and GE Mortgages. Over the past three years the banks' share of the mortgage market has dropped to 75 per cent from 84 per cent. ANZ believes most of the loans from non-conforming lenders are going to small businesses and sole operators. Bluestone said two-thirds of his customers are self-employed and many want the funds to expand their businesses. GE Mortgages estimates the size of the non-conforming market to be around $15 billion and said it comprises a mix of people consolidating their debts, small businesses seeking capital and people who can't meet the banks' strict lending criteria.