Mutual lender to offer personalised pricing based on credit scores

A mutual lender has announced a partnership which will see consumers get personalised, risk-based pricing on home loans and credit cards



Mutual lender, G&C Mutual Bank has announced a partnership which will offer consumers discounts on home loans and credit cards based on their credit score.

The partnership with – a joint initiative by P2P lender SocietyOne and credit agency Veda – will offer personalised, risk-based rates to those with good credit scores.

When it comes to home loans, consumers with a Veda Score of 700 or higher can receive a G&C Mutual Bank home loan with a variable rate of 4.29% or a three-year fixed rate of 4.29%, with no set-up costs or on-going fees. This offer will also apply to both owner-occupied and investment home loans.

As a comparison, according to Commonwealth Bank's website – Australia's largest home loan lender – the standard variable rate for owner-occupied home loans is 5.45%, while the investment standard variable rate is 5.72%. The three-year fixed rates for owner-occupied and investment loans are 4.54% and 4.69%, respectively.

G&C Mutual Bank CEO Dave Taylor told Australian Broker that this will drive much needed innovation and competition in the lending market.

“The reality is that every bank and financial institution has always to some degree done risk-based pricing, but traditionally they have not been very transparent about it. If a high quality credit consumer comes in, they may be able to get a discount of negotiate a price, whereas for everyone else, particularly consumers who don’t ask questions, will get a much higher price. There has been a degree of laziness by lenders. 

“What we have tried to do is be a lot more transparent. We started talking to SocietyOne about six months ago and we’ve restructured some of our products in a more transparent way to acknowledge and make clear to consumers that they will get a better deal if they have a better credit score.”

Taylor says he thinks personalised, risk-based pricing based on a consumer’s credit score is something we will start to see more of in the industry.

“We hope this is a trend we will start to see more of. There are signs overseas where these developments have been in place for the last two or three years, so Australia is actually a little bit behind. 

“One of the reasons I am positive this will become a trend is because the younger generations want to be in control. They primarily want to do things online, they want great service and they want to feel they are getting a good deal. I think this type of proposition is attractive to that type of demographic. 

“These days people want to talk to each other on social media and they want to know what is going to give them the best chance. This proposition around credit scores fits in very nicely with that sort of outlook and we think it will become a trend.”

Whilst G&C Mutual Bank currently doesn’t offer loans through the third party broker channel, Taylor told Australian Broker that it is always looking at the broker channel, and if there is significant interest from some of the major broker groups in this initiative, he would be “very happy” to talk to them. 

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