Non-banks fight to compete on fixed rates

by Adam Smith23 May 2012

A non-bank head has claimed that the sector has often been uncompetitive on fixed rates as two mortgage managers move to undercut the majors.

Better Mortgage Management has introduced a two-year fixed rate loan at 5.94%. The loan includes an offset account, Visa debit card, redraw facility and no annual or ongoing fees.

BMM managing director Murray Cowan said it had been historically difficult for non-bank lenders to compete against large banks on fixed rate pricing.

"Traditionally the non-bank sector has struggled to compete with some of the fixed rate offers from the banking sector and I think that has cost our sector a considerable amount of business in recent times," he said.

The comments come as Australian First Mortgage has also announced cuts to its fixed rate product suite. The mortgage manager has decreased fixed rates on its Complete Option full doc product by as much as 40bps, and dropped rates as much as 30bps for its Flexible Option full doc loan.

AFM also announced cuts to its low doc products, ranging between 19bps for its one-year fixed rate and 30bps for its five-year rate.

The lender will also reduce commercial interest rates on its Smart Suite products, dropping five-year rates by 55bps and one-year rates by 35bps.

"These reductions in interest rates have provided AFM with an opportunity to offer some market leading fixed rates to enable the company to move forward in building its portfolio, and its strategy of organic growth," AFM director Ian Forbes said.

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