COVID-19 crisis leads borrowers back to the big four banks
June 19 2020
Borrowers displayed a clear preference for the big banks during the coronavirus pandemic, with the proportion of home loans with the four major lenders rising sharply.New research shows 38 per cent of home loan platform Lendi’s customers chose a big four bank for their mortgage between March 1 and May 31. For the 12 months to the end of February, this figure was just 16 per cent.
The research drew on data from 12,500 loan submissions made between March and May, across 38 lenders.
The swing to the big four – ANZ, CBA, NAB and Westpac – is even more pronounced when it comes to refinancing.
Almost half (48 per cent) of all borrowers refinancing their loans across this period chose to do so with a major bank, compared to just 14 per cent of borrowers in the 12 months before the pandemic.
Lendi co-founder and managing director David Hyman said price rather than security had driven this trend.
“Banks started to fight it out on the refinance front as new lending started to contract, by offering generous cash-back incentives and record low fixed rates to win customers,” Hyman says.
“Mortgage holders looking to shore up their position and reduce their outgoings jumped on these refinance deals.”
Unsurprisingly, the surge in demand has had a flow-on effect to customer service levels, with Lendi’s research showing loan processing times have blown out at some of the bigger banks.
“In some cases, this meant borrowers missed out on securing the low rate they applied for – not a good customer outcome – due to no fault of their own,” Hyman says.