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Online mortgage wars gather even more steam

July 07, 2011

Australians are embracing online mortgage products with gusto, resulting in heated competition from lenders for a bigger share of the .com lending market.

The new home loan wars are making it easier to land a great deal and get the best mortgage. NAB’s online division Ubank led the charge in May with an online-only standard variable rate of 6.59 percent and in June, FirstMac launched its online arm – loans.com.au.

The lender arrived in the market with an aggressively discounted standard variable rate of 6.58 percent (for June only), applied for the life of the loan. Loans.com.au has also promised customers it will only move rates if the Reserve Bank does, and will not practice the out of cycle rate rises favoured by the major banks.

Discounted home loan products are definitely becoming the first choice for home loan borrowers. A new survey from Mortgage Choice showed 33 percent of new borrowers now expect an ongoing reduction on their home loan interest rate. That figure is up from 17 percent in December 2010.

Even with all the media chatter surrounding an imminent interest rate rise, according to the Mortgage Choice data, variable rate products accounted for 89 percent of all approvals over the past four months. Fixed loans meanwhile came in at between 10 and 12 percent of all mortgage approvals.

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