Mortgage wars not always good for borrowers: Resi
Resi Mortgage Corporation CEO Lisa Montgomery has expressed concern at the current mortgage war going on between the country’s four biggest banks for borrowers’ business with its focus solely on the cheapest rate.
“It is all about rate… All the rhetoric including from the government is about rate. It’s commoditising the service and sending a bad message to borrowers,” Montgomery says.
“I shudder for the borrower. The rate is important but it is not the only loan criteria. What value is being placed on offering guidance and support? Maybe there is a better way to structure your loan so you pay less overall?”
According to Montgomery, if the banks continue to push their interest rates above all else, they will create an oligopoly, since none of the other lenders can compete on this criteria alone.
Resi lends via its franchised stores on the eastern seaboard and Perth as well as through select broker groups.
Montgomery says the lender aims to offer a holistic service to borrowers, but struggles against the “white noise” of interest rate talk.
“Our aim is to help borrowers set goals and build wealth,” she says.
“We attempt to talk to about more than just the rate and compete on our service proposition.
“We aim to have an ongoing relationship with the customer.”
One the back of the CBA campaign, Jane Slack-Smith of Your Property Success warns investors they should always read the terms and conditions before signing any new deal.
“They say they’ll beat any advertised rate but many of my clients have actually been able to negotiate better than what’s advertised at the moment,” she says.
Kristy Sheppard of Mortgage Choice says smaller banks shouldn’t be forgotten either.
“Often they’re fighting even harder for market share and sometimes they’re more likely to offer affordable deals or better specials within their deals,” she says.
“If you already have a home loan and you’re looking to switch, there are a range of switching options, where you can have up to $1000 paid by the lender you’re looking to switch to.”
Sheppard advises approaching a lender with your head held high.
“Because the housing market is so subdued and housing finance commitments are at a 30-year low, lenders are really jostling to retain loans,” she says.
“It’s a terrific market to be in, if you’re looking for a new home loan.”
Official ABS lending finance statistics for July revealed that banks continue to outpace non-banks on the provision of mortgage finance.
On a seasonally-adjusted basis, the number of owner occupier mortgages financed by increased by 1.2% while those financed by non-banks fell by 2.8% over the same period.