Competition within the mortgage market is set to intensify further as rates rise, creating greater disparity among established lenders in relation to benchmark rates, loan-to- value ratios and sales and service models. 

However that as a result of this industry re-alignment, the borrower will be the clear winner and will benefit from a wider product choice, more concentrated levels of customer service and clearer segmentation across the lending market.

No-one will argue that the last two years has provided challenges for all lenders, but the upside is that that same period has also created new opportunities for established lenders with a multi- disciplinary business model to evolve and reinvigorate the entire customer proposition for borrowers.

The consolidation that has occurred within the non-bank sector has strengthened the future for competition to remain in the market and allows the non-bank hallmark of innovation to continue – an industry element which is essential to ensuring customers have real choice.

A decrease in loan-to-value ratios across the industry has affected all lenders but the upside is that non-banks are now in a position to offer greater discounted rates whilst still retaining a decent margin, simply because most don’t have to juggle the competing interests of borrowers and shareholders.

The last twelve months has also seen the gap between standard variable rates of the major banks increase to more than a quarter of a percent,  making the bank benchmark a less reliable indicator of what’s competitive across the market and leading borrowers to revise their search of both loans and lenders.

Loan volumes have markedly increased for the non-banks during this last quarter which may be largely attributed to that shifting benchmark but it’s also abundantly clear that an increase in the level of dissatisfaction by bank customers is allowing us to claw back some of our previous market share.

With some key industry players still revising their distribution channels, there is still significant change and effect that is yet to be felt by the market and this is likely to have some further impact on borrower behavior.

The effect that consumer sentiment has had on the mortgage industry over the last two years has been largely underestimated, so with more change to come, this effect has yet to be fully played out and is set to be one of the key market differentials for 2010.

Tags: Fixed Rate, Home Loan, Home Loans, Interest Rates, Lender, non-bank lenders, Refinance, variable rate

This entry was posted on Thursday, February 18th, 2010 at 9:38 am and is filed under Interest Rates, Refinancing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.