Borrowers searching for cheaper interest rates should not be spooked by the rhetoric of banks – with prime non-bank lenders continuing to provide a valuable source of finance in the mortgage market, Resi Mortgage Corporation said today.

 

Resi’s Head of Consumer Advocacy, Lisa Montgomery, says despite the recent period of negativity towards non-bank lenders by banks and financial commentators – established companies including Resi play a crucial role in the mortgage industry.

 

She says many prime non-bank lenders continue to offer lower standard variable rates than banks, who have confused the market by drip feeding rate rises, often beyond that of the official Reserve Bank rate - and posting huge profits in the process.

 

“What we have seen happening is banks initially claiming the moral high ground on interest rates – only to then drip feed information to the market and impose rate rises as they juggle the competing interests of shareholders and borrowers.

 

“These interest rate tactics have deceived vulnerable borrowers, many who were lured by the attraction of what they believed a bank would offer,” she says.

 

Montgomery says this behaviour is sending mixed messages to borrowers, many of whom had been spooked off borrowing outside banks and are now disillusioned about the mortgage market.

 

“In the current climate people are forgetting that prime non-bank lenders have been in the market providing competition to the banks for over two decades. As a result of this competition consumers have enjoyed lower rates and saved themselves thousands of dollars,” adds Montgomery.

 

“For the past 10 years prime non-bank lenders have offered standard variable rates which are on average 0.75 per cent below those of banks. Even in today’s moving market, the standard variable rate offered by prime non-bank lenders is still around half a per cent or more below that of the major banks. “

 

Ms Montgomery acknowledges interest rates have gone up outside the Reserve Bank cycle, but reiterates that banks, building societies, credit unions and non-bank lenders have all passed on increases.

 

“Rising interest rates are everyone’s problem,” she says. “What we are saying is don’t listen to the rhetoric of the banks and commentators out there and don’t be scared to look for a better deal from a prime non-bank lender. We are here to stay.

 

“We wish to make it clear we are not leaving this lending space. Rather, we remain committed to ensuring borrowers have a real choice so we don’t return to the days where the banks had a virtual monopoly in the home loan market.”

 

Ms Montgomery says borrowers must remember they can still look to a prime non-bank lender like Resi, confident that they are not answerable to shareholders or have exposure to the corporate sector.

“Our core business is looking after the mortgage interests of Australians,” she added.