There have been some positive signs in the banking sector (particularly with respect to competition) that I wanted to update you on.
When the Global Financial Crisis hit Australian shores many lenders retreated from the market (stopped lending) and quite a few of the second tier lenders where acquired by the Big 4 including St George, BankWest, RAMS and so on.
However, the good news is that some lenders have started to return to the market bring more competition and that’s good for borrowers. Examples of this include Macquarie Bank and Citibank. Typically, when a lender returns to a market they need to “buy” new business (i.e. offer lower rates than their competitors).
The strongest move so far was made by Citibank last week. It is offering a very low ongoing rate of 4.99% with all the bells and whistles (offset, interest only, etc.). Most cut price mortgage products (with similarly low interest rates) have many restrictions but the Citibank offer is a genuine full-featured product. This rate (of 4.99%) is equivalent to a discount of 1.18% off the average standard variable rate offered by the Big 4 banks. This is the biggest discount I have ever seen (since founding ProSolution in 2002) so its worthy of a mention in this blog.
So if you know of any colleagues, family or friends that are in the market for a mortgage, forward this email to them (and we’d welcome the opportunity to help them). Of course, if you’re interested in this offer simply reply to this email.
I’ll provide you with more updates in the coming months. Leave any comments or questions below. Thanks.