Looking past the big banks
News that the Commonwealth Bank of Australia (RBA) has increased its mortgage rate by 0.20 per cent, over the Reserve Bank of Australia’s (RBA) 0.25 per cent rate rise, was met with aghast from existing and prospective borrowers alike this week. But the question many are now asking is just how will other lenders play their cards?
Mortgage industry expectations are that the rest of the major banks will follow CBA’s lead and pass on a rate rise over and above the RBA’s.
First Property Buyer’s sister publication The Adviser – the business magazine for the mortgage industry – spoke to both Adelaide and Bendigo Bank and Resimac to find out what approach they would take.
Both lenders said their rates were now “under review” but revealed little, with any changes to be announced within the coming days, they said.
But while the majority of second tier banks and non-bank lenders remain tight-lipped on their game plans, there are some promising signs that competition may be opening up.
Just yesterday Yellow Brick Road extended its commitment to not lift its mortgage rate beyond any RBA increases before February 2011.
LJ Hooker Home Loans also came out and promised to freeze its variable interest rate until at least February next year.
While the outlook is unclear, aspiring property buyers should watch this alternative lender space.
The mainstream press is awash with borrowers complaining about the big banks’ stranglehold on their home loans – but the choice essentially lies in the hand of the borrower, and it appears that choice is gathering pace. It’s time for borrowers to vote with their feet.
Following the global financial crisis, a severe funding shortage saw the majority of second tier and non-bank lenders scale their product offerings right back, leaving borrowers almost only with the major banks as their options.
The smaller banks and non-banks are now fighting back however, with some strong competition emerging over the past couple of weeks.
If you’re looking at borrowing over the next couple of months, don’t just consider the majors; cast your net wider and examine the deals on offer at many of the smaller lending alternatives.
If you don’t have the time to shop around yourself, visit a mortgage broker. They represent a panel of different lenders and can help you find the best deal available.