Don’t fear small lenders
Home owners told to secure the best rate
MANY mortgage hunters have an unfounded fear of non-bank lenders and could be dudding themselves out of the best deal.
After the Reserve Bank of Australia slashed the cash rate to record lows earlier this month, it was the smaller, littleknown outfits Athena, Reduce Home Loans, Homestar Finance, Homeloans.com.au and Pacific Mortgage Group that led the charge in passing on interest rate cuts to customers.
Ratecity research director Sally Tindall said non-bank lenders had helped drive prices down, particularly in recent months as record numbers moved to refinance, especially when it came to fixed rates.
“Right now, the lowest fixedrate loan is just 1.88 per cent but that’s from HSBC, while Westpac isn’t far behind offering rates of 1.89 per cent if you’ve got a decent deposit,” she said.
Canstar figures show, however, that smaller lenders offer the most compelling variable rates. Reduce Home Loans has the lowest at 1.77 per cent, but it is only available to customers with 40 per cent equity in their home or a 40 per cent deposit. “Many people look at low rates offered by non-bank lenders and think, ‘Well, that’s great, but I’ve never heard of them’,” Ms Tindall said.
“Just because you haven’t heard of them doesn’t necessarily mean they’re risky. Lowcost lenders such as Homestar Finance and Reduce Home
Loans might not have the big marketing budgets of CBA and Westpac, but they’ve been issuing home loans for over a decade. Some low-cost lenders are also backed by banks or created by former bank executives looking to shake up the market.”
These include Ubank (backed by National Australia Bank), Tic Toc (backed by Bendigo and Adelaide Bank), Aussie Home Loans (a subsidiary of Commonwealth Bank), Athena (created by former NAB executives) and Nano (formed by exWestpac executives).
Canstar financial services group executive Steve Mickenbecker added: “Non-banks are not regulated by the Australian Prudential Regulation Authority but are regulated by ASIC, so you can take some level of comfort in that.”