Survey finds most Australians overlook alternative lenders and potential savings
Many Australians may be limiting their choices and missing out on potential savings by favouring well-known lenders when taking out a home loan, according to a major broking franchise.
Mortgage Choice’s recent survey of 1,000 people found that more than three-quarters selected a lender they already knew, while only 24% opted for a new provider.
Anthony Waldron (pictured top), chief executive of Mortgage Choice, said this tendency to stay with familiar banks could mean borrowers are overlooking more competitive offers from smaller or non-bank lenders.
Australia’s major banks have established strong ties with customers, often beginning through early financial education programs in schools and reinforced by their widespread presence in communities. As a result, these institutions are frequently seen as the default option for home loans. However, Waldron warns that this preference may not always serve borrowers’ best interests.
“In a competitive property market, getting your home loan approved quickly can mean the difference between securing your dream home and missing out,” he said. “Smaller lenders can be faster to approve a home loan application than bigger banks.” He also noted that these lenders often use more agile systems and newer technology, enabling quicker decisions.
The ability to pass on Reserve Bank of Australia (RBA) cash rate cuts promptly is another area where smaller lenders may excel. Waldron pointed out that some, such as Athena Home Loans, have passed on recent RBA rate reductions in full and immediately after announcement.
Flexibility is also a consideration. Non-bank lenders, operating under different regulations, may be able to offer solutions for borrowers with less conventional income streams, such as the self-employed or small business owners.
Still, navigating the home loan market can be complex, which may explain why many borrowers default to familiar names. “That’s where expert advice, and the choice a mortgage broker can offer, become a borrower’s secret weapon,” said Waldron. He explained that brokers can access a broad range of loan products, helping borrowers compare options and find the most suitable lender.
Waldron noted that the financial impact of choosing the right loan can be substantial. He cited an example where a borrower with a $500,000 loan and an 80% loan-to-value ratio could save over $170 per month – and more than $2,000 a year – by selecting a particular product. Over a 30-year term, switching from a major lender to a lower-rate product could result in savings of $66,420 with minimum repayments, or $155,117 and an early loan payoff by 50 months with higher repayments.
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