A controversial group buying campaign conducted by a consumer group will not undermine brokers, one of its non-bank participants has claimed.
Consumer group Choice has announced its controversial One Big Switch campaign is now ready to offer mortgage discounts to its 40,000 participants. Choice director of campaigns and communications Christopher Zinn said smaller and medium-sized lenders "are keen to compete".
Australian BrokerNews has confirmed non-bank lenders Resimac, Firstmac and Mortgage Ezy will be involved in the campaign. Resimac associate director of product and marketing Frank Knez told Australian BrokerNews the campaign would serve to raise the profile of non-bank lenders.
"From our perspective we thought it was a great opportunity to increase our business and to deliver competition back to the mortgage market," Knez commented.
The campaign has been roundly criticised by brokers and the MFAA, with Choice receiving a $250 finder's fee for each successful mortgage application, and One Big Switch drawing a 0.5% upfront commission. Choice has previously been highly critical of commissions offered to mortgage brokers. In spite of the scepticism surrounding the campaign, Knez said he did not believe it would undermine brokers.
"Banks have such large control of new business we think we can attract this new business without competing with brokers. We think it will assist the non-bank sector in hopefully delivering more volumes," he remarked.
Consumers who signed up for the campaign will now receive discounts off the participating lenders' lowest advertised rates. Resi Home Loans CEO Lisa Montgomery, speaking to the Australian Financial Review, criticised the model, saying Resi would not offer a special rate to a select group of people without offering the rate to its existing customer base. However, Knez said he did not expect backlash from existing customers over the offer.
"The offer is based on the group buying power of One Big Switch. One would have to expect by the amount of interest they've generated that their members would get a better price, and I think consumers will understand that. I think a consumer who took out a loan offered by a Resimac mortgage manager would have a very sharp-priced loan anyway at a much lower rate than the major banks," he commented.
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