Amid tough competition among lenders and record low interest rates, more and more Australians are turning to small and mid-tier banks to refinance their home loans, according to the latest data from Australian Finance Group (AFG).
“The non-majors lifted their share of the refinancing market to 43.2% across the last quarter,” said Mark Hewitt, general manager of sales and operations at AFG. “Suncorp, with an increase of 3.3%, and AMP with a lift of 2.1% led the way with refinancers, largely at the expense of the Westpac stable.”
AFG defines “major banks” as the Big Four and their counterparts/subsidiaries, while “non-majors” include AMP and Suncorp, as well as non-bank lenders and customer-owned banks.
With the major banks increasing their fixed and variable interest rates and tightening their lending to investors in response to a crackdown by APRA, customers are motivated to seek more competitive rates and greater savings through their brokers.
“You can see there is a lot more competition in the market than there was 18 months ago,” Hewitt said. “We're seeing the non-majors pick up some of the slack.”
According to Peter White, executive director of the Finance Brokers Association of Australia (FBAA), more Aussies were turning to non-bank lenders for finance, with companies such as Pepper Group, Liberty Financial, and La Trobe Mortgage Corporation gaining a bigger chunk of the market.
“The non-bank sector is a lot more agile and of course isn't directly controlled by APRA because they are not banks,” said White. “They have a greater degree of flexibility to take on risk.”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan