There is no doubt that the ‘Big 4’ banks (NAB, CBA, ANZ and Westpac) have maintained a dominant profile in the Australian finance market.
Many of us grew up with the CBA Dollarmite bank accounts which are still in use throughout Australian primary schools.
There is comfort in knowing your mortgage is with one of the big banks but now more than ever, and in this highly scrutinised lending environment, you the consumer have choice…. and plenty of it.
Did you know there are over 120 lenders in Australia including banks, non-bank and second tier lenders1?
So when the Big 4 shut the door, don’t despair, you do have options and sometimes you may be far better off without the banks!
First let us explain the difference between lenders. Banks
Banks are authorised deposit taking institutions (ADIs) and can use their own funds to provide home loans.
They provide integrated banking packages including savings, transaction accounts and credit cards and have wide branch networks. Second tier lenders
Second tier lenders are those that are not part of the Big 4. They include a surprising number of household names such as ING Direct, Suncorp, ME Bank, Citibank and AMP Bank to name a few.
While some are now owned by the big banks it is worth considering their competitive offerings. They usually have few or no branches, lower overheads, focus on customer service and provide niche products.
Building societies and credit unions
These non-profit cooperatives are owned by the people who use their services so each member is both a customer and a shareholder. Member deposits are used to fund loans. Their rates can be very competitive. Non-bank lenders
They do not hold an Australian banking licence so cannot accept deposits therefore they source wholesale funding via investors, financiers, trusts and even the Big 4 banks.
They typically offer competitive interest rates, more flexible lending criteria, faster loan processing time, responsiveness and emphasis on customer service. Non-bank share of housing lending is growing
Research in February 2019 reveals that ADIs rejected just over 40% of home loan applications, compared to 20% rejected by non-banks. Not surprisingly, non-bank annualised owner-occupied credit is growing at 17.6%2.
Source: Digital Finance Analytics
The banks with no loyalty
The Big 4 offer discounts to new customers but where is the loyalty for existing customers?
Let’s say you were a keen borrower a few years ago on an interest rate of 3.9%, after ‘out of cycle interest rates hikes’, that loan would now be at around 4.8%. So new customers are nabbing a better rate than existing customers – no client loyalty there!
As your mortgage finance specialist, we:
- have access to many lenders – not just the Big 4
- can re-negotiate your loan on your behalf, or
- will investigate other lenders where you will be a new client and possibly have access to lower introductory rates.
DO NOT go mortgage shopping by yourself. Each credit application you make will be recorded on your credit history, and will affect your credit score.
Talk to us before going directly to your bank.
If the Big 4 have shut the door on you, or you have been thinking about re-financing, contact us TODAY. We will prepare your best position possible for application to the lender most suited to your situation and requirements.
- Canstar, Home Loan Providers
- Mortgage Business/Digital Finance Analytics