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Non-banks to rise through rate hikes: Bridgit

A bridging loan specialist expects to see borrowers shopping around as the cash rate rises, with non-banks tipped to benefit.

After the cash rate rise last week, Aaron Bassin, chief executive and founder of fintech lender Bridgit (formerly TechLend) believes already fierce competition in mortgage lending is only set to accelerate further and that there will be opportunities for non-bank lenders.

“What I do expect to see is an increase in customers shopping around for the best rate,” Mr Bassin said.

“Within this, lenders with ‘no fee’ structures in place are likely to see an increase in engagement as borrowers look to save where they can, particularly with non-bank lenders outside the big banks.”

NAB CEO Ross McEwan made similar comments at the bank’s half-year results briefing last week, telling investors that the bank needs to prepare for a rise in refinancing as the cash rate is likely to keep lifting to around 200 to 250 basis points (bps) above its current place.

Meanwhile, a report from KPMG earlier this week tipped that while a higher cash rate could alleviate margin pressures for the banks, strong competition will persist in the industry.

“We need to be ready for that and we are, for customers looking at their optionality, particularly as they’re coming off a fixed rate and [they’ll say] ‘where do I go to next?’” Mr McEwan told analysts.

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“That’s something certainly in our mindset here to be all over. It’s going to be a competitive marketplace going forward, there are 160 players in this market at the moment.”

Alongside its big four rivals, NAB was quick to raise its variable home loan rates by 25 bps, passing on the full rate rise from the Reserve Bank of Australia (RBA).

Similarly, Mr Bassin has observed non-bank lenders beginning to follow suit, with more expected to do the same.

Bridgit has decided to maintain its pricing at its current levels for now, but it will be an “interesting and competitive period”, Mr Bassin said.

“The extent of the impact of this rate rise for any given non-bank lender will generally depend on agreements regarding their facility,” Mr Bassin explained.

“These agreements will then determine the direct impact the rate rise may have on their business, as well as what they end up passing on to their customers.”

But while Mr Bassin does not expect the immediate impact of the first rate rise to be detrimental to home owners, he has expressed concerns about the increases that will follow.

“What we will expect in the short term is an increase in queries from borrowers about their position and how they can best navigate a new world of rising rates,” Mr Bassin said.

“What is more worrying is the long term impact of multiple interest rate rises, that could seriously affect homeowner confidence and slow down growth in the housing market significantly.”

Bridgit launched in July last year, making its debut with its interest-free bridging loan that promised same-day pre-approval, before it rebranded.

It closed a $7.7 million raise in March, with plans to use the funding to scale up its product capabilities, including ongoing development of its software solution that leverages property and assesses risk.

[Related: Mortgage price wars to rage on through rate rises]

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