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The non-bank sector’s Christmas wishes were finally answered on Friday as the last of the big banks lifted their rates.
St George and Westpac increased their variable home loan rates by 0.20 per cent and 0.15 per cent respectively, following recent ANZ, CBA and NAB rate hikes.
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The banks’ decision to raise rates has significantly reduced their price advantage.
The non-bank sector is now looking to capitalise on a more levelled environment as they claw back market share lost to the banks since the US sub-prime crisis.
John Pehlivanidis, group general manager of boutique wholesale funder Capital Securities, says the later part of 2007 has very much been a “lesson in patience” for the non-bank sector.
“The non-bank sector [has] stood by their service proposition – and good service is how [non-banks] will retain their long-term relationships with customers,” he says.
According to Pehlivanidis the impact of the US sub-prime crisis will certainly keep the sector on its toes in the future – citing a greater need for strategic planning in day-to-day operations as part of the new order for the non-banks.
“The key to success now is to concentrate on achieving the plans we have laid out.
“We have to be able to sustain our product and price offering to make the most of the current climate – and to be careful of how we preposition ourselves in the future,” he says.
For RESI’s head of consumer advocacy Lisa Montgomery the crisis has made it clear that the non-bank sector must become more diverse with its funding options.
“From a market perspective, this has had a big impact on the non-bank sector’s reputation – it was unfortunate that the banks decided to use this crisis to claw back market share,” she says.
“The sector can still offer competitive pricing because of our lower profit margins and overheads,” she says.
Nevertheless, Montgomery stresses there will need to be a greater emphasis placed on the sector’s service capabilities and product innovation.
