New Lenders Make Mark
The Age
Tuesday May 28, 1996
IF COUNTRIES like the United States are any indication, it is only a matter of time before non-bank mortgage lenders begin to take several places among Australia's top 10 home- loan lenders.
Aussie Home Loans has already claimed a significant share of the market with its lending portfolio totalling more than $3 billion, placing it in the country's top 10 mortgage lenders.
Such has been the popularity of mortgage administrators that FAI Home Loans has also begun to make its mark. Its business has tripled in size in the past two years and it now manages more than $700 million in home loans.
FAI is the second largest mortgage manager in Victoria and, according to state manager, Mr Mike Herman, its growth in market share has come at the expense of the big banks.
Mr Herman said about 70 per cent of FAI's business had come from refinancing loans for home owners wanting to make the most of cheaper interest rates.
Having established itself in Victoria four years ago, FAI has set itself a five-year plan to become as large as some of the foreign banks.
While the big banks continue to attract business from older borrowers, the mortgage administrators are drawing in younger people.
``We are particularly popular with people in the under-40 age bracket who tend to be more inclined to shop around for the best deal," Mr Herman said.
Like other mortgage managers, FAI offers a variable interest rate considerably lower than the 10.5 per cent offered by the big banks.
According to FAI's managing director, Mr John McGee, its variable interest rate of 8.8 per cent was the lowest of all mortgage managers.
Mr McGee said among the deals available through FAI were the Borrowers Choice loan which offered a variable of 8.8 per cent with an all-up loan establishment fee of $600 or a 9 per cent variable with no fees.
Investors are charged the same rate as owner-occupiers.
He said the discounted variable offered by FAI amounted to a saving of $30,000 on a $100,000 loan over 25 years compared with the variable rate offered by the big banks.
He said other options for borrowers included early repayment, flexible payment terms, portability and the option to swap to fixed rates.
© 1996 The Age
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