The chief executive of a non-major bank has spoken out about the majors' decision to lift mortgage rates.
On Thursday, CBA became the second lender to hike its home loan rates with the announcement of a 15-basis-point increase. This was followed by an announcement from NAB on Friday morning that it would hit mortgage holders with a 17-basis-point rate rise to cover the cost of holding additional capital. A few hours later, ANZ revealed that it would lift its variable rates by 18 basis points.
Australia’s smaller lenders now stand to gain a greater share of the mortgage market, according to Auswide Bank CEO Martin Barrett.
Speaking to Mortgage Business, Mr Barrett said he believes the majors are “clearly taking a view that if they all move together, then that will create a level of customer hopelessness” where customers are left feeling that they have no choice but to accept higher home loan rates.
“We do not have any intention of putting our rates up,” Mr Barrett said. “In the past we have competed with the big banks with substantial capital disadvantages.
"Now that gap has been narrowed, not completely nullified, but narrowed, it creates some great opportunities for us,” he said.
Mr Barrett said non-major lenders are now in the perfect position to take market share by providing a true alternative to the big banks.
He pointed out that property investors who hold a mortgage with the major banks have been hit the hardest.
“If you look at investors, who represent 35 to 40 per cent of the market, they have now had rates increase on them twice,” Mr Barrett said.
“For some investor customers that could be more than a 50-basis-point rate increase just over the last few months,” he said. “That is reasonably material. If they felt that they had some form of expected contract from their existing organisations they may be feeling somewhat aggrieved by that.”
Mr Barrett said the actions of the major banks has created the “perfect opportunity” for smaller banks to work together in a stronger and more customer-focused way to improve their offerings.
Auswide Bank recently announced a new variable home loan rate of 3.98 per cent.
“We wanted to put that offer out there that was very attractive at a time when the big banks were putting their rates up,” Mr Barrett said.