As a non-bank launches a new campaign to help new home owners, MPA looks at the market it's after
The new system allows banks to make lending decisions based on comprehensive data
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The calls for a genuine banking alternative are not something new, but they have gotten stronger, according to a new fintech lender which says it is “proudly not a bank, and never will be”.
Athena Home Loans launched this week offering competitive rates and faster decisions to help borrowers refinance their mortgages. Lending for new home purchasers will launch later in 2019.
The group has been in the background for the last two years. When they started on this journey there was already a “trust gap” between consumers and the banks, but by the time of their launch this week, that gap has only gotten bigger.
According to research from CoreData, in the first quarter of 2018 60.8% of people trusted the banking industry. By the first quarter of 2019, this had dropped to just 28%.
Customers cited the most common reasons for the decrease were because ‘they ripped people off’ (77%), ‘they were dishonest’ (71%) and a ‘lack of transparency’ (66%).
Speaking to MPA, co-founder and CEO Nathan Walsh was particularly annoyed that only 25% of borrowers think their lender cares about them. And while 93% said they want to pay off their home loan faster, only one in five actually believe their lender wants them to succeed.
Walsh says that with Athena, it is all about helping their customers afford home loans and be able to pay them off faster.
So how are they planning on doing this?
“We want to save Aussies save a lot of money by helping them pay off their loan faster and that starts with incredibly competitive rates,” Walsh says.
Rates at Athena start from 3.49% variable for owner occupier principal and interest loans. For investors, rates start at 3,89%
“When you compare that to the kind of rates that you’re seeing from a typical big bank making that switch can save an Aussie family tens of thousands of dollars over the life of the loan,” he adds.
Not only is Athena offering these rates, the digital lender is promising consistent rates for all borrowers.
“The community is sick of this rate bait and rate creep when you look out there and people have been lured in with these honeymoon rates and then stung with rate hikes and fees,” Walsh says.
“We have seen in the recent ACCC residential pricing inquiry where the gap between what existing customers pay and what new customers pay is enormous.
“Twenty-four basis points on a P&I loan, that equates to loyal customers being overcharged by hundreds of millions of dollars every year. We want to change that. In an Australian first we make a promise: we will never charge existing customers more on a like for like loan. Great rates will stay great.”
But offering borrowers cheaper rates isn’t the only way they are helping them save money.
Walsh says, “What we have done is combine that with a series of home loan hacks really designed to help you pay off your home loan faster to make that journey to owning your home faster, cheaper, and less stressful.”
These “hacks” include removing application, account or exit fees, offering a fee-free redraw facility and loan customisation, so borrowers can decide whether they make repayments monthly, fortnightly or weekly.
How does being a fintech help them?
Walsh says, “Because we don’t have the bankers, the branches, the overheads, we can save money and pass that on to cut rates and save fees.
“We’ll be connecting with customers where ever they’re engaging on digital. That includes search and social. It’s interesting that people have moved to incredibly digital in so many parts of their lives and mortgages have been the laggard, so we see this as a natural opportunity.
“You don’t need to go to a branch. That lengthy one on one consultation in person that will end up costing you money when you can apply online.”
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