A non-bank lender has “set a new floor” for variable interest rates in the broker market as the group looks to go head to head with the banks which have been increasing their market share over recent months.
Firstmac has cut the new business rates on its Broker Special product range and ZIP Home Loan by 10 basis points, effective immediately, now boasting the lowest advertised variable investor rate available to brokers as well as one of the lowest owner-occupied variable rates.
Managing director Kim Cannon expressed hope the rate cuts will help the group prevent history from repeating itself.
“During the GFC, the big banks increased their dominance in the market due to their funding advantage, but we will make sure that this time will be different,” he said.
“We have successfully raised $2.3bn in funding since the COVID-19 crisis hit and we are aggressively competing for prime loans as a true alternative to the banks.”
Now, the group’s owner-occupier Broker Special basic 80 P&I sits at just 2.59%, its investor rate for the same category is 2.84%, and the ZIP Loan rests at 2.73%. Further, there are no annual or ongoing fees associated with any of the group's loans.
The lender's strength has been made clear through the pandemic as the most recent analysis of its $12.6bn loan book has shown the proportion of its borrowers on COVID-19 hardship arrangements has not only been on the gradual decline, but has remained “consistently lower” than the banks.
According to Cannon, its superiority in this regard can be attributed to the group’s personalised approach to tailoring a solution for each borrower’s individual circumstances.
“The number of borrowers needing hardship arrangements has fallen steadily from mid-June and was about 10% down from its peak by the end of July,” Cannon said.
“The transparency and strength of our prime loan book has been a key factor in maintaining our funding support, which in turn has allowed us to keep offering brokers competitive products with market-leading rates like our Broker Specials.”