The CEO of Australia’s largest member-owned mortgage provider says the group has no interest in distributing home loans through “price driven” online portals.
Speaking at a media lunch in Sydney yesterday, CUA chief executive Rob Goudswaard said traditional mortgage brokers have been good for the business, but new online players are not part of the group’s future distribution strategy.
Mr Goudswaard, who spent 30 years at ANZ before taking the top job at CUA last year, said the mutual lender had looked at alternative broker models, such as Joust.
“I think they are price driven. You will lose customers on price. I’m not convinced it is the market we want,” he said.
“If you look at Joust, it is not clear to me that they are customers who would become your customers because of your service proposition. They are there because you are the lowest price. So we are not interested,” he said.
Joust is an online home loan platform that competes with traditional mortgage brokers by allowing lenders to bid for a customer's mortgage. The platform currently has a panel of 10 lenders, seven of which are mutuals: Australian Unity, Beyond Bank, BankVic, Gateway Credit Union, People's Choice Credit Union, IMB Bank and Victorian Teachers Mutual Bank.
Bank rate hikes a blessing
Commenting on the Australian home loan market, the CUA boss said the group made a conscious decision not to follow the banks on heavy price discounting earlier in the year, which has benefited the group in recent weeks.
“In terms of the market that we operate in, around about June, prices were pretty hot. We made a deliberate decision not to follow the prices down,” Mr Goudswaard said.
“We have to generate our own capital, so we know the point at which that is not a viable position to play in. The consequence of not playing in that is you don’t get the volume you expect. So we have not seen that level of volume come through to us,” he said.
However, in the last three weeks CUA has seen an increase in volumes as its large competitors begin increasing both fixed and variable rates in an effort to preserve margin and offset higher funding costs.
“You have seen statements from other lenders increasing their fixed and variable rate. We just sit there and the next thing you know we become a more attractive alternative,” Mr Goudswaard said.
“From a home lending perspective we started out slow this half but we are back to what we call our operating rhythm. We are expecting that to last,” he said.
The CUA chief added that the group has not seen a big swing from variable to fixed rates at this stage.