The Great Recession: Its Effects on the Financial Market
Major bank corporations are under threat with the emergence of a hot, new alternative in the lending industry—non-banks. Back in 2007-08, more than a decade ago, major bank corporations suffered a huge blow in what is now known as the Global Financial Crisis. According to economists, the impact of the crisis is similar to the Great Depression of the 1930s. During this time, we witnessed the collapse of Lehman Brothers, one of the five largest banks in the US that relied on short-term financial sources to stay afloat until it eventually declared bankruptcy.
The Global Financial Crisis ushered in a time of extensive regulatory reforms to fortify the banking sector, but these initiatives are extremely restricting. In Australia, banking security became tighter, leading to stricter lending standards. Gradually, there has been a steady decline in the attitude of borrowers towards the banking sector. The combined effect of the financial crisis with the banking reforms paved the way for the emergence and success of non-bank lending.
The Shift to Non-bank Lending
The impetus for the Great Recession was the collapse of the housing market. Years after, a decline in the listings of existing homes coupled with the stagnant income of the average taxpayer, diminished the growth of the housing market. In 2013 and in 2016, mortgage rates from major banks soared, making loans less affordable and accessible. The resulting decline of banks’ refinancing activity shifted the borrowers’ sentiment towards non-bank lenders. In fact, in 2017 the market share of family mortgages in non-bank lenders rose to 52.5% from a mere 23.5% back in 2007.
Additionally, a huge selection of major banks faced litigations and scrambled to repair the damage done during the crisis. The profitability of these large banks took a substantial blow because of the associated fines and the legal fees they incurred. In the aftermath of the financial crisis, borrowers with low credit scores were denied mortgage credit. During this crucial time, a ripe financial market atmosphere proved to be advantageous for non-bank lenders. They took this opportunity to focus their lending structure on refinancing activity and aggressively expanded their operations.
Because of the borrower-centred structure of non-bank lenders, many have migrated towards seeking their services as opposed to big conglomerate banks.
When Banks Say No, Turn to No B*nk
No B*nk is the prime example of a non-bank lending institution. In the post-financial crisis landscape where large banks mainly service the wealthiest and those who look good on paper, No B*nk offers the best alternative solution for small businesses and anyone who feels undervalued by conglomerate banks.
Our core values are focused on financing businesses and individuals in the most transparent and efficient manner. We are an institution that truly cares for our clients. We always make sure we distance ourselves from the cold, faceless opportunist qualities of a classic bank. We individualize our services. We recognize that each situation is unique and that looking at all the angles, we could better understand your financial circumstance and in turn, provide you with access to the financial assistance you need.
In contrast to the large rates offered by classic banks, No B*nk offers the fairest fees. There is no catch, no fine print. All the information will be laid out on the table. We will show you why transparency is key to gaining the clients’ trust and respect—the tenets of our institution.
Just like you, we know the hardships that small businesses face. We are not in the business of leeching off small businesses and our valued clients.
So, if you’re unsure where to turn for a business loan, say hello to No B*nk. The perfect fit to help you kick off your business for 2020.
Paul Boyd Skinner, Managing Director of No B*nk has spent his career over the last 16 years helping thousands of people and businesses secure non-bank lending.