Many borrowers have ditched the Big Four banks in favour of small lenders with competitive rates, according to new data from Lendi, an online mortgage broker.
The proportion of borrowers choosing the major banks has dropped in the past six months, the data showed.
Only 24% of borrowers using the platform opted for one of the Big Four between January and June 2019, compared to 30% in 2018, according to the data.
Over the same period, the major banks charged more interest than other lenders, while rates fell across the board, the data showed.
All lenders on the platform had a median interest rate of 3.64% in June, dropping from a 3.81% median in January, according to the data.
The major banks lowered their rate by only 0.08% and had an increase in February, the data showed. The Big Four’s median rate was 3.79% in June—0.22% higher than the median rate charged by the rest of the lenders, according to the data.
However, competitive rates were not the only reason customers had been turning away from the Big Four, according to Lendi managing director David Hyman.
“The royal commission shattered trust in the big institutions. Now, we are seeing more borrowers opting to go with less established or newer brands because savings are winning out over brand loyalty,” said Hyman.
Internal reviews in the wake of the royal commission could explain the Big Four’s declining market share, according to Felicity Emmett, a senior economist at Australia and New Zealand Banking Group (ANZ).
“It was the banks that really came under quite a lot of criticism in the royal commission, and so it’s the banks that have really responded to that criticism by looking very carefully at their responsible lending obligations and how they assess mortgage serviceability,” said Emmett.
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