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Mortgage lenders: Is bigger actually better?

Mortgage lenders: Is bigger actually better?

Bigger doesn’t always mean better. When it comes to shopping around for a competitive home loan don’t restrict yourself to big banks or well-known brands, as smaller lenders could save you more money.

Smaller lenders are the less known, smaller financial institutions that compete against the bigger and better known financial institutions for your home loan business. Despite their size, their rates and fees, such as upfront and ongoing costs, are very competitive against the bigger lenders. Due to their size and competitive nature, smaller lenders can sometimes be a little more flexible with negotiating for a home loan, as they understand the importance of winning you as a customer and place customer service at the forefront of many smaller lenders businesses.

For anyone entering the home loan market or looking around for a more competitive interest rate, here are a couple of reasons you should not overlook small lenders.

They are competitive

In February 2013 three small lenders made finance headlines when they cut their variable mortgage rates without being prompted to do so from the Reserve Bank of Australia.

Holiday Coast Credit Union reduced some of its loans by 20 basis points, BMC mortgage reduced several of theirs by 10 basis points and IMB cut one of its loans by five basis points.

It pays to keep an eye out for competitive interest rates, as you might find money waiting to be saved outside the parameters of the big top four banks. 

One in six flick big banks

In October 2013 Australian Prudential Regulation Authority data revealed that smaller banks and mortgage lenders are stealing market share and one-in-six Australians away from big banks.

In the last financial year the top four big banks were given a run for their money, collectively losing 0.52 percent of market share to small lenders.

The overwhelming reason Australians are ditching the big for the small is discounted rates, better service and incentives.

Big or small, overall size really doesn’t matter, its finding the best fit for you. Don’t limit your choices and shop around for the best home loan for you. With over 2000 home loans to compare on RateCity, you can now compare some of the biggest lenders against some of the smallest to see which ones stack up best.

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