September 7, 2010
If you are a first home buyer, considering one of the major lenders through to the smaller brands is one of the toughest choices you will make when choosing a home loan. So why do so many Australians shop with one of the major banks, namely ANZ, Commonwealth Bank, NAB and Westpac?
According to data from the Australian Prudential Regulation Authority (APRA), in July the major four banks (Westpac, Commonwealth Bank, ANZ and NAB) had 83 percent of the market share of loans for owner-occupied properties.
Westpac was reported to have the largest portion of the home loan market at around 27 percent, followed by Commonwealth Bank with 25 percent.
Bundle it together in a package deal
One reason why the major four banks hold such a large percentage of the home loan market is because they are able to offer package deals. Due to their sheer size, they are able to combine a range of different products into the one package at a discount rate. Some smaller financial institutions are unable to do this because they only offer one or two products, such as home loans or savings account, so they may not have the facilities or the ability to offer package deals.
Package deals can be handy especially for first home buyers who may be entering the market this mortgage season. For a discounted rate, package deals combine a number of different products such as a home loan, credit card and transaction accounts into the one package with the one financial institution.
Some lenders may offer up to 0.7 percent discount on your home loan interest rate alone. Some may also offer discounted interest rates on your credit card, reduced account fees, higher interest rates on your transaction account as well as discounts on other products such as home and contents insurance.
While some package deals can be good, there could be other home loans on the market they may offer a lower rate, so if you are a first home buyer who is looking at entering the property market this mortgage season, compare home loans online. Don’t forget to crunch numbers, remember to look at the fees included, and work out if you will save more with a package deal or with a regular home loan.