In the continually-evolving lending landscape, new customers have become unwitting targets in the tussle over the grab for mortgage market share by some banks and lending institutions.
But what does the race to offer discounts on mortgages really mean to you?
Well, if you’re a new applicant seeking a fresh new home loan, the news might be good.
Out of the 10 biggest mortgage lenders in Australia currently, 6 are offering discounts to new customers and there is a wealth of choice on the table, with around 170 home-loan products being pitched to this new generation of property-buyers. But according to some experienced mortgage brokers, the discounts could mean that existing customers remain less pleased.
While the Reserve Bank has not moved interest rates for two years, and despite the crack-down on inappropriate lending from some banks, the discounts are still being promoted – something that flies in the face of the recent Royal Commission findings that revealed some obvious bad behaviour in the home-lending sector.
Of the ‘big 4’ banks, three currently offer new customers discounts and because of the hunger to secure new business, it is a trend set to continue. To help you understand the impact on your own situation, an existing NAB client who has a 12-month old mortgage for $400,000 could now be forking out as much as 0.48 percentage points more than a new customer being sold exactly the same product. For savvy budgeters, that equates to $1920 per year extra.
For new customers who tick the ‘low-risk’ borrower checklist, it’s clear the odds are in your favour as the lending pendulum swings away from investors and interest-only borrowers.
Statistics show that mortgage lending to property investors has dropped by 16 per cent in the past 12 months, according to most recent Bureau of Statistics housing finance data. In contrast, loans to owner-occupier first-home buyers saw an increase of 22 per cent.
With credit control conditions expected to tighten further, as well as a predicted, continued fall in house prices, lenders are keen to attract new business by winning over these low-risk borrowers who are first-time buyers.
To find out if you can benefit, the best advice is to speak to a professional mortgage broker. With their experience in comparing rates and shopping around, you’re sure to find the best possible deal to suit your needs. For investors already in the mortgage market, a tune-up may still help. By weighing up the pros and cons of switching lenders, you can determine whether it is best for you to stay, or refinance and save.
For accurate, personalised advice about access to the most competitive interest rates for your mortgage, speak to Lending Specialists today.