- Posted By Prince Lakshman
A big percentage of home loans during the coronavirus pandemic are now being done with the country’s big four banks. This is a clear indicator how borrowers are now preferring the big banks amidst the COVID-19 crisis.
According to home loan platform Lendi, 38 per cent of its customers chose a big four bank for their mortgage between March 1 and May 31. This figure was just 16 per cent for the last 12 months before that.
The research shows 12,500 loan submission on the platform made between March and May, across 38 lenders.
The jump to the big four banks is even clearer when it comes to refinancing. Forty-eight per cent of borrowers refinanced their loans during this period with a major bank, compared to just 14 per cent in the 12 months before the pandemic.
Lendi co-founder and managing director David Hyman said price rather than security had driven this trend.
“Banks started to fight it out on the refinance front as new lending started to contract, by offering generous cash-back incentives and record low fixed rates to win customers,” Hyman says.
“Mortgage holders looking to shore up their position and reduce their outgoings jumped on these refinance deals.”
Although the big four proved most popular during the peak of the pandemic, mortgage brokers said the big banks had tightened up their lending policies over the past few months.
“Customers are facing a significant reduction in available credit,” said Vanessa Burgemeestre, finance consultant at Jim’s Financial Services.
“This credit squeeze is a major challenge for customers, so having finance options available from non-bank lenders, which create competition, is crucial.”
Hyman also urges borrowers to continue considering smaller and non-banks. “They may not have the same marketing budget as the big banks, but many offer very competitive fixed and variable rates and exceptional customer service.”
In the grand scheme of things, borrowers are after quick and responsive service and the best rate and both big and small banks should be able to cater to this need.
Whichever path a customer ultimately chooses, what’s imperative is to get a clear understanding of all the options available and the services on offer. That’s the best way to make an informed decision on a loan that genuinely suits your lifestyle and circumstances.