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Jessica Darnbrough
The battle for market share has now officially begun, with one non-bank lender announcing its plans to undercut the majors in pricing.
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Yesterday Australian First Mortgage raised its standard variable interest rate by just 0.30 per cent – significantly less than the big four.
AFM director Iain Forbes said the company was committed to backing its service proposition with a competitive interest rate.
“AFM has in fact reduced its own margin to demonstrate to the market place that to AFM, as an independent non-bank lender, it is not all about profitability and bottom line results,” Mr Forbes said.
The non-bank lender’s leading product, The AFM Flexible Option product, boasts an interest rate of 7.04 per cent – 0.82 per cent lower than that of Westpac.
After suffering through a flight to quality during the GFC, it seems the non-bank sector is now back with a vengeance and ready to wage war on the majors.
According to the latest data from AFG, non-bank lenders have started to slowly claw market share away from the majors, with the sector now accounting for 12.5 per cent of all loans written.
However, this figure is still significantly down on the 20.4 per cent achieved in 2007.
