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Jessica Darnbrough
The days of discounted mortgages could be coming to an end as intense competition has compressed lender margins to unsustainably low levels.
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Suncorp’s general manager intermediaries – retail bank Steven Heavey said ongoing funding pressures had meant there was now fewer opportunities for discounted pricing.
“Many lenders are likely to be pushed to hold firm on rates,” he said.
“This is already evident with the out of cycle rate rises seen recently.”
But while the rising cost of funds is definitely negatively impacting Australia’s lenders, Connective principal Mark Haron says there will still be opportunities for lenders to discount their mortgages moving forward.
“I think the choices lenders make with regards to their rates will be done on a month by month basis,” he told The Adviser.
“When the cost of funds rises, it will ultimately force some lenders to reduce their appetite for credit. That said, there are a lot of lenders out there, so when one is pricing itself out of the market, others will be actively seeking credit growth. You just have to keep your eyes open,” Mr Haron said.
And CBA’s executive general manager, third party and mobile banking Kathy Cummings agrees.
At the last CBA media briefing held in Sydney, Ms Cummings told journalists that the mortgage lending market was the most competitive it had been in 20 years.
“I have worked in this industry a very long time and have never seen the level of competition between lenders that we are seeing today,” MS Cummings said.
