Non-bank offers rates under 3% with new product

by Julia Corderoy29 Sep 2015
Non-bank lender Mortgage Ezy has unveiled a new discount home loan product which will offer owner-occupied loans with rates under 3%.

Speaking exclusively to Australian Broker, the CEO of Mortgage Ezy, Peter James, unveiled the Reduce Home Loan Combo range. The new product range will offer consumers rates as low as 2.5% on owner-occupied loans when they settle their investment loan with the non-bank as well.

According to James, the interest rate applied to investment loans on the Reduce Home Loan Combo range will be the average investment standard variable rate of the major banks – CBA, Westpac, ANZ and NAB – at the time of settlement. 

“The investor loan is linked to the average rate of the big four’s standard variable rate for investments loans. Obviously, if the average rate goes up after settlement, our rate doesn’t. It is linked to what the rate is at settlement,” he told Australian Broker.

“There are talks that investor rates may increase again, but our rate is locked in at the time of settlement. However, it will move up and down as per the RBA’s decisions.”

Once a consumer has settled their investment loan with Mortgage Ezy, James says the Reduce Home Loan Combo range will offer huge discounts to their owner-occupied loan. 

Economizer owner-occupied loans will have a rate of 2.5%, while the non-bank’s Prime owner-occupied loans will have a rate of 2.99%. However, the Economizer product will be subject to an establishment fee of 0.6%, which will be waived on the Prime product. The commission structures will also vary for the two products. Brokers will receive upfront commission on Economizer owner-occupied loans of 0.6% and 0.9% for the Prime owner-occupied loans.

James says this will give consumers and brokers more choice and flexibility.

“If a client is looking for the lowest rate, they would choose the Economizer, but the highest that they will pay is 2.99%, being the Prime loan,” he told Australian Broker.

“There is something in it for the broker and the client with the Prime loan, being the lower fees and higher commission, but if the consumer wants the absolute rock-bottom rate, they can go with the Economizer.”

According to James, the Reduce Home Loan Combo range allows Mortgage Ezy to rebalance their home loan book without having to increase rates for investors.

“Clearly there are all sorts of changes with investor loans and we’re looking for clients that are giving us their home loan as well as their investment loan. We’ve had a huge amount of demand just for investment loans because the banks are cracking down with serviceability and raising interest rates. Mortgage Ezy serviceability is largely unchanged, but we are seeing that our book is getting a little bit unbalanced so we are looking to try and get people giving us both sides of their property – both the investment loan and the housing loan, rather than just giving us the investment loan," he told Australian Broker.

“It is another way we are rebalancing our books without having to raise interest rates for investors. We want to be more than just another standard lender. We are looking to innovate and this is the first of a few initiatives that are really going to rock brokers’ socks off.”
 

COMMENTS

  • by Mortgage Guru 29/09/2015 9:16:18 AM

    What's the REAL rate i.e. comparison rate? What are the establishment and ongoing fees?

  • by Rich 29/09/2015 9:22:41 AM

    This is called a con job special. Lenders should be forced to publish the weighted average rate which accurately informs the borrower what they are actually paying for all loans.

  • by barney 29/09/2015 9:39:52 AM

    What happens when the ATO wake up to this? It reminds me of the old structure where lenders allowed investors to capitalise interest on investment loans while paying off deductible loans. Ultimately the ATO don't like it when you manipulate their slice of the pie. Then comes the back interest and penalties...