Online competition a great thing for customers
(30 September 2011 – Australia) The internet is heating up competition between the country’s biggest banks, with account offerings now extending to mortgages.
Small online outfits such as Loans.com.au, MyRate.com.au, emoney.net.au and StateCustodians.com.au are among those now giving the big four Australian banks a run on their standard variable interest rates. Some offer a full percentage below those offered by so-called lowest bank rates.
The average of those mortgage loans offered by the big four banks on August 24 was 7.78 percent, while an average of the four online-only lenders - unaffiliated with the established banks - was 6.77 percent, 101 basis points less.
The upstarts remain market minnows compared with the banking behemoths, whose collective profit takings exceeded $22 billion over the past year. Even so, the banks are likely to keep a wary eye on the fast-growing competition in one of their most profitable sectors.
The Australian Bankers’ Association said that although it doesn’t represent the online-online lenders, it welcomes the competition.
The major banks, meanwhile, are offering their own online offerings. For instance, National Australia Bank-owned UBank, launched in 2008, offers a standard variable rate at 6.79 per cent, well below the 7.67 per cent charged by NAB.
And many of the online lenders are in fact backed by banks or non-bank lenders - MyRate.com is funded through ING Bank, while mortgage originator FirstMac provides loans for Loans.com.
The playing field is also becoming increasingly competitive with other entrants including Ratebusters.com.au, BetterOption.com.au, easystreet.com.au, Yellow Brick Road (www.ybr.com.au), headed by Wizard Home Loans founder Mark Bouris.
The average of those mortgage loans offered by the big four banks on August 24 was 7.78 percent, while an average of the four online-only lenders - unaffiliated with the established banks - was 6.77 percent, 101 basis points less.
The upstarts remain market minnows compared with the banking behemoths, whose collective profit takings exceeded $22 billion over the past year. Even so, the banks are likely to keep a wary eye on the fast-growing competition in one of their most profitable sectors.
The Australian Bankers’ Association said that although it doesn’t represent the online-online lenders, it welcomes the competition.
The major banks, meanwhile, are offering their own online offerings. For instance, National Australia Bank-owned UBank, launched in 2008, offers a standard variable rate at 6.79 per cent, well below the 7.67 per cent charged by NAB.
And many of the online lenders are in fact backed by banks or non-bank lenders - MyRate.com is funded through ING Bank, while mortgage originator FirstMac provides loans for Loans.com.
The playing field is also becoming increasingly competitive with other entrants including Ratebusters.com.au, BetterOption.com.au, easystreet.com.au, Yellow Brick Road (www.ybr.com.au), headed by Wizard Home Loans founder Mark Bouris.
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