Over the next few years, we are likely to see a number of international investors tackle the Australian banks.
While these lenders are never going to conquer the Aussie mortgage market, their low rates will certainly “keep the bastards” honest and are a good reason why borrowers are not best-served by just applying to their own bank for a loan.
Over the past few months, we have seen major Wall St players take major investments in Australian non-conforming lenders giving them the muscle to shirtfront the Australian banks.
These non-conforming lenders normally specialise in lo-doc loans. But they do also compete for good quality borrowers, with good jobs and good credit history. As a result one such lender, Liberty, is offering rates as low as 3.79%
Recently, Australian non-conforming lenders Pepper, La Trobe and Bluestone have either been bought out or had major injections from US investors (see table below). Armed with this cash, they are now in a position to compete for ‘Mum and Dad’ loans. And, given the strength of these Wall St investors, they won’t be pushed over by Australia’s behemoth lenders.
You can see clearly in this table how the non-Aussie lenders can compete.
One reason why the non-conforming lenders can now compete and challenge the major lenders is because of the renaissance of securitisation; where lenders bundle up a package of home loans and ‘sell them’ to institutional investors so that they have evenmore funds to lend to home owners.
The annual growth rate in Australian securitisers was 13 per cent. The Australian Prudential Regulator (APRA) does not control securitised lenders as much as it does the banks, meaning that these non-conforming lenders can compete aggressively for your business.
So, if you think you are getting a raw deal from your bank, call you mortgage broker. Chances are s/he will have a securitised lender on hand who can give it to the banks.
*These rates were gleaned from aggregator software and bank websites. They are not necessarily applicable to everyone’s circumstances – nor do they include any fees and charges. Please contact your broker to find the most suitable loan for you.