Small Victorian lender Collins Home Loans undercuts major bank mortgage interest rates

Many borrowers may not have heard of Collins Home Loans, which currently offers a standard variable mortgage rate of 6.32%, the lowest in Australia. 

The decision by ANZ to raise it is variable mortgage rates by six basis points to 7.42% on Friday means it currently offers a standard variable mortgage that 110 basis points more expensive the Collins Home Loans. 

The Melbourne-based mortgage lender was founded by CEO Rob Emmett in 1992 and currently has mortgage book of about $800 million. 

Collins Home Loans finances its lending through a mix of its own residential mortgage backed securities program, on-balance sheet lending and from residential mortgage-back securities funding from other lenders. 

Its home loans are distributed nationally via mortgage brokers. 

“We broadcast ourselves far and wide… We have found a sweet spot with the first-home buyer market and also with borrowers seeking construction finance,” Emmett, a qualified CPA and fellow of the Mortgage and Finance Industry Association, tells Property Observer.

“We have a healthy mix of loans,” he says.

The Collins Home Loans mission statement says that it sources its funds in “exactly the same way as the banks”.

“The only difference is that we deliver a much more competitive and flexible product because we don’t have to accommodate a branch network and over-priced marketing budgets like the banks.”

In March, Collins Home Loans general manager Allan Willoughby told mortgage broking magazine The Adviser that non-bank lenders were ready to step in when major banks lifted rates out of the RBA cycle.

“People are already expecting the majors to move out of cycle with the Reserve Bank. If and when this happens, the non-bank sector will be ready to swoop in and reclaim some of that all-important market share,” he said.

The range of Collins Home Loans includes first-home buyer loans, investment loans, fixed rate loans, self-employed loans and low-doc loans.