Non-bank lenders are stepping up their attack on Australia’s banks, with many of the lenders slashing the interest on their standard variable rate products.
A new study by RateCity found that the spread between the average standard variable rates of Australia’s banks and non-bank lenders had grown from 26 basis points in September 2009 to 37 basis points in June 2010.
According to RateCity’s chief executive officer Damian Smith, many non-bank lenders are finding it easier to raise wholesale funding to support their home loan businesses than they did previously.
“There’s genuine appetite from them to grow market share. This can mean the real possibility of big savings for borrowers if they shop around,” Mr Smith said.
But while many non-bank lenders may offer more competitive standard variable rates than their banking counterparts, Mr Smith said borrowers need to keep in mind that all lenders including banks offer better rates than their standard variable rates for different mortgages such as basic home loans, although they may come with fewer features and more conditions.
“This is where the bigger banks can sometimes be advantageous by offering discounts for packaging a mortgage with other financial products such as a credit card and transaction account, although many credit unions also offer package deals.”