An online lender says it has more than doubled its home loan applications since dropping its interest rate in the wake of the Reserve Bank’s decision to cut the official cash rate.
Last Wednesday, loans.com.au announced it would cut its variable interest rate to 4.23% – a full 1.42% lower than the standard variable home loan rate announced by Commonwealth Bank.
Kim Cannon, managing director of Firstmac – the lender behind loans.com.au – says the online lender has had an increase of “more than a hundred percent” in applications in week.
The move by the Reserve Bank has really shaken up the home loan market, according to Cannon, and prompted consumers to take a close look at their interest rate – especially consumers looking to refinance.
“They are refinancing in record numbers for a better deal,” he said.
Loans.com.au, which doesn’t engage in third party broker distribution, has
previously told
Australian Broker that consumers seeking to refinance their home loans are also ditching branches and brokers and going online to do so.
Data compiled by the online lender and released late last year revealed that 53% of customers borrowing for property were refinancing an existing home loan and were increasingly opting for “convenient” online lending.
“Borrowers who are refinancing know their way around the home loan sector; they’ve been through the exercise with their original lender,” Cannon told
Australian Broker.
"Online lending is an increasing threat to brokers when you consider the trajectory of other fields that follow a brokerage model of service. Look at travel agents; once, people planning their holiday would go to a travel agent who would take care of all their bookings and that would be that. Now, if people go to a travel agent, it’s often for information that they will take away and do their own bookings and make savings. There used to be a travel agent on every corner, but now they are few and far between, and mostly used for particularly complicated travel arrangements."
However, Cannon did say brokers can co-exist in this increasingly online and DIY culture if they can adapt and innovate.
Do you think the convenience of online lenders poses a threat to the broker industry? Take our online poll now.
