Powered by MOMENTUM MEDIA
subscribe to our newsletter

Neobank CEO urges borrowers to build buffer

Borrowers should resist the urge to take on more debt and build a buffer to guard against the continued weakness in the economic environment, according to the CEO of a challenger bank.

Co-founder and CEO of Xinja Bank Eric Wilson has said that the Reserve Bank of Australia’s decision to hold the official cash rate at 1.5 per cent should not deter borrowers from attempting to pay off their debts and building a financial buffer as a protection against continued weakness in the economy.

“While it’s tempting to borrow when rates are this low, borrowers should accelerate debt repayments if they can, to build a buffer against signs the economy is slowing,” Mr Wilson said.  

“Rates this low, even without an official cut, mean the economy is sluggish and there’s little or no inflation.

“Our advice is to get yourself in the best position to deal with lower economic growth and the possibility of lower jobs growth by cutting your debt as much as you can.”

Advertisement
Advertisement

The RBA’s decision to hold the cash rate took some analysts by surprise, with continued weakness in the credit and housing market, high household debt levels, and a flat inflation rate prompting calls for economic stimulus.  

However, Mr Wilson said that Xinja’s lending strategy would not be beholden to market trends.

Xinja, which currently holds a restricted banking licence, is planning on launching its own loan products upon its receipt of a full banking licence from APRA.

Mr Wilson said that the lender would not base its interest rates on traditional market indicators, adding that pricing would be tailored to reflect an individual borrower’s financial circumstances.   

“We’re intending to offer a sharper rate to those who manage their money well,” he added.

PROMOTED CONTENT


“We think customers should be rewarded for this behaviour and continue to be rewarded.

“We don’t like special rates for new customers that aren’t shared with current borrowers. In fact, the longer you are with us, the keener we hope to be able to price your loan assuming your financial data is sound.”

[Related: Xinja hits minimum target on path to $5m equity raise]

Neobank CEO urges borrowers to build buffer
Xinja CEO Eric Wilson
mortgagebusiness

Latest News

Citi is to exit its consumer business, including mortgages, loans, retail banking and credit card operations, in Australia and 12 other ...

The major bank’s CEO has reiterated that responsible lending changes could simplify the lender’s processes and improve mortgage approv...

The non-major has reported growth in housing lending as well as a rise in home loan settlements via the broker channel. ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.