RAMS could become full bank

Westpac is considering turning its mortgage lending franchise RAMS into a separate, fully serviced banking operation.

The bank has reportedly undertaking a trial among Westpac staff using the RAMS software platform to raise savings deposits.

Westpac acquired RAMS in 2007 for $140 million following a disastrous float on the ASX on the eve of the GFC.

Should Westpac move forward with its decision, RAMS would be able to raise deposits through its 92-strong franchise stores.

One analyst told the Australian Financial Review RAMS was looking to diversify its revenue base in the wake of NAB growing its UBank business.

RAMS was founded by John Kinghorn during the peak of the non-bank lending boom in the late 1990s and grew into one of the strongest brands alongside Aussie and Wizard.

In the wake of the GFC, John Symond’s Aussie mortgage broking business bought Wizard, and the Commonwealth Bank acquired a third of Aussie.

News of RAMS becoming a challenger bank brand comes as mortgage competition among the major banks heats up, with ANZ the latest major bank to cut interest rates on its fixed-rate mortgage products.

One-third of lenders on the Mortgage Choice panel have reduced interest rates on some or all of their fixed term home loans in the past week, some more than once.

The average three-year fixed-term interest rate (the most popular type) is now at its lowest level since October 2009, the mortgage broker says.

According to the MFAA the ban on exit fees is encouraging borrowers to switch to lenders, but only among the major banks.

The major banks hold 92.3% of the home loan market compared with 89.2% before the ban was announced.