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Three new players to offer cheap loans
Thursday, February 04, 2010
A NEW generation of lenders are set to challenge the major banks, with three players flagging big moves on discount home loans.
Leading wholesale mortgage funder Resimac is to launch a new retail lending business next week that will trade as Hemisphere Financial Solutions.
Resimac has been piloting Hemisphere since late November and has decided to proceed with the venture as its first direct lending business to home borrowers.
The head of independent market research firm Mozo, Rohan Gamble, said the home loan sector was on the cusp of a new wave of competition.
"We're seeing new players come in to the market with serious backing behind them," he said.
Hemisphere is marketing a standard variable mortgage at 6.19 per cent through its website and some mortgage brokers.
That is more than 0.3 per cent cheaper than National Australia Bank at 6.49 per cent and 0.57 per cent better than industry laggard Westpac.
While Resimac has a relatively low profile among borrowers, it has been a major player in the Australian mortgage industry since 1985 as a wholesale funder for a string of second-tier home lenders.
Resimac director of products Frank Knez said the company had been developing the Hemisphere business for more than a year.
"This is our first foray in taking a retail brand direct to the public and we are going to put a lot of effort into building the brand on the web and in magazines and newspapers," he said.
"We want to position Hemisphere in the market as good on customer service -- this is not just about price."
Resimac's push into direct lending looms as one of the serious threats to the stranglehold of the four major banks on the home lending market.
The big banks - NAB, Westpac, ANZ and Commonwealth - accounted for 95 per cent of all new home lending in December and have boosted profitability on mortgages since the global financial crisis paralysed funding to non-bank lenders.
However, easing credit markets in the second half of last year have revived hopes that more lenders such as Hemisphere will emerge to undercut the loan pricing of the banks.
Mortgage originators such as Aussie Home Loans, RAMS and Wizard which led price competition in the 1990s are now either wholly or partly owned by the major banks.
Another non-bank player set to make a splash this year is one of the co-founders of Wizard, Paul Ryan.
Mr Ryan is the principal of Opportune Home Loans, which is now ramping up lending through a rapidly-growing franchised network. Opportune is marketing a standard variable home loan to owner-occupiers at 6.24 per cent.
"We want to be the next generation of Aussie, RAMS and Wizard," he said.
"We're expecting to double our lending to $500 million this year."
Yet another start-up is New Loan, a direct lending arm of listed financial services group First Folio.
New Loan is offering a variable rate mortgage, primarily to investment borrowers, at 5.89 per cent.
First Folio's managing director Mark Forsyth said New Loan had obtained funding lines through ING's wholesale arm and Bendigo Bank.
"We've got unlimited funding," he said.
- George Lekakis - Herald Sun
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