The Mortgage industry in Australia has now changed forever

By: Jon Colley, Professional Lending Specialist, Loan Wize

The current financial climate and uncertainty surrounding us today has created a very unique situation in Australian mortgages, which has and will change the certainty for mortgage borrowers forever, and many Australian mortgage clients don’t yet know the half of it.

Once upon a time in a perfect world, the banks would set their standard variable rates at a level playing field where borrowers had certainty that the only rate movements would occur when the RBA me on the first Tuesday of every month. They would offer discounts for the life of the loan that provided clients with the knowledge that they would always have competitive rate.

Now however, the lenders have cut their ties with the RBA, and in doing so, each other. The variation between available standard variable rates between the big 4 is up to 0.15% at the moment, and to make the effect of this worse, the discounts available between lenders is always under review, depending on who is buying market share at the time.

This causes a great deal of confusion for mortgage holders as the result of this can be variations of up to 0.4% between lenders current offers, and if you have a mortgage more than three years old, your current discounts could also be well below those available now.

Now the banks are controlling the types of clients they are seeking by the discounts they offer, effectively buying market share for certain types of loans, whether it is by loan size (which has always been the case) or more recently by lower loan to value ratios. This has created considerable opportunity for astute clients in the current market.

The ultimate consequence of this shift in mortgage rates and ideology by the banks is that borrowers will need to become more reliant on a Professional Lending Specialist for advise to ensure that they are suitably informed on products available prior to applying for a new loan or when considering refinancing their existing loan.

With the smaller second tier lenders also gaining significant market share to the big 4 over the last three months, this is also another factor to consider. Will they continue this trend by taking hold of this current “Shift” in thinking and using this to create and ongoing advantage to consumers?

Now more than ever the value proposition provided by a Professional Lending Specialist has never been higher. With recent regulation and licensing only strengthening the offering from Professional Mortgage Brokers, and access to lenders that aren’t available to the retail market, it is now more critical than ever to ensure you seek quality advice before considering a new mortgage.

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