Intense competition for residential mortgages is driving down rates as customers use online auction platforms to watch banks and brokers bid for their home loan business.
LoanDolphin, a home loan bidding platform, has reached a significant milestone with more than $100 million worth of mortgages auctioned since the service launched in February.
The free online platform allows customers to refinance or apply for a new home loan at rates not advertised by lenders. LoanDolphin CEO Ranin Mendis says customers are savings “tens of thousands of dollars” on their mortgage.
The service, which lets brokers, banks and other lenders bid to win customers’ business, has delivered an average saving of $5,254 a year for customers, according to Mr Mendis.
“The simplicity, efficiency and negotiating power provided to customer via LoanDolphin’s zero cost and obligation free service have contributed to our exponential growth,” he said.
“It only takes three minutes for a customer to upload their home loan requirements (anonymously) before mortgage brokers, lenders and banks start bidding to offer them the lowest home loan rates in Australia.”
Mr Mendis said most of the rates are either not advertised or offered to buyers the first time they try to secure a home loan, with customers saving an average 87 basis points.
LoanDolphin customer Mike Israel had a home loan with a major bank, paying a rate of 5.19 per cent, and decided to try out the platform.
“I found I was paying too much interest. I heard about LoanDolphin and decided to use it so banks and lenders could fight for my mortgage instead of me having to go through the arduous task of looking for a lower rate,” he said.
At the end of the auction Mr Israel accepted an offer that reduced his rate by 1.20 per cent.
Last week Mortgage Business reported that Joust, another loan bidding platform, has seen $118 million of mortgages auctioned after only 12 weeks in business.
“In an increasingly competitive home loan market, our lenders are extremely keen for this type of business,” Joust founder Mark Bevan said. “About 90 per cent of the volume during the 12 weeks has been for refinance of existing loans but with increasing brand awareness we expect to see more new home buyers using the Joust platform for new home loans.”