Analysis: Australia’s major banks are racing to offer digital mortgages, eventually they have the potential to disrupt a highly lucrative market, Clancy Yeates writes.
All of Australia’s major banks are racing to offer digital mortgages: systems that allow banks to decide whether to lend hundreds of thousands of dollars, even millions, in as little as 10 minutes.
Digital home loans are often cheaper for banks to provide and sometimes the lenders promise to pass on these savings in the form of lower rates.So, can these much-hyped products actually save customers money, as well as give the green light quickly? And are they likely to be useful for a large number of borrowers?
Westpac launched its digital mortgage process for refinancers in late 2022, and ANZ Bank plans to launch its digital loan to the public later this year. National Australia Bank instead has a platform that it says allows its bankers to approve loans quickly, and about half of all its mortgage applicants get an answer in 24 hours. Smaller non-bank lenders such as Athena Home Loans are also targeting the market.
Both rates are below the rates of more than 5 per cent charged by the big four’s flagship brands, according to RateCity data. CBA also says its Unloan product has only passed on 2.6 percentage points of the 3 percentage points in official rate rises to borrowers since it was launched in May last year.
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