Borrowers flocked to big four in May

Home loan platform reports Aussies turning to major banks from March to May more than double the regular figures

Borrowers flocked to big four in May


By Madison Utley

The uncertainty that arrived in Australia along with the onset of the COVID-19 pandemic seems to have pushed borrowers back to the big four banks “in droves”, according to data from home loan platform Lendi.

Between 1 March and 31 May 2020, 38% of Lendi’s home loan customers chose a big four bank as compared to just 16% in pre-pandemic conditions over the 12 months to the end of February.

“It was during the final weeks of March and early April that we really saw our borrower behaviour deviate from the norm. Preferences for the big four peaked at this time, alongside refinancing activity and hardship enquiries,” said Lendi co-founder and CEO David Hyman.

According to the group’s data, refinancers led the shift towards the big four during the early stages of the pandemic. 

While in the year prior, just 14% of Lendi refinance customers went with a major bank, that figure spiked to 48% in the last three months. 

“The big lenders took advantage of cheaper wholesale funding from the RBA and an influx of deposits to offer very competitive fixed term rates to home loan customers,” said Hyman.

“They became the flavour of the month, most notably in April, but what we’ve seen since is some of the big banks unable to keep up with the demand generated.”

Additionally, the proportion of Lendi’s borrowers opting for fixed loans climbed to 26% in the three months to the end of May, a sizable increase from the 15% of borrowers recorded in the year to 29 February 2020.  

Investors continue to be more likely to fix rates than owner occupiers, with 33% of Lendi’s investor customers choosing to fix between March and the end of May.

“To date, we haven’t seen the same uptake or swing towards interest only repayment terms and the proportion of customers selecting this option remains stable,” said Hyman.

“As households come off their mortgage holidays or JobKeeper payments wind up, we may see an increase in people moving to interest only terms.”

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