Home buyers breaking big bank addiction

By 19 January 2012

Not that long ago, getting a home loan was often an ordeal. Not only did home buyers need to prove they had the financial capacity to repay a loan; they also had to sit through an uncomfortable interview with their eagle-eyed bank manager and gain his personal tick of approval. A home buyer’s future often rested on how trustworthy they looked.

Today, the growth of alternative lenders such as credit unions, brokers, regional banks and non-bank lenders has increased competition. Home buyers now have more choice and flexibility than ever before – although they’re not necessarily taking advantage of it.

Research from RAMS Home Loans reveals that, alternative lenders are beginning to get a greater of the market

The RAMS Pulse Check survey, asked both ‘home seekers’, who are currently looking to buy their first home, and ‘home owners’, who have purchased their first home in the past 12 months, for their views on the home buying process in the current market.

There is a significant difference between a home buyer’s preference and their eventual choice of home loan.

62% of home seekers would prefer an alternative lender such as a credit union or non-bank lender, yet only 36% of home owners end up with one.

Only 28% of home owners told us that main banks generally offer the best mortgage deals,” By comparison, 44% felt that the various alternative lenders provide a better deal.

Most of the alternative lenders now offer an equally broad range of mortgage products, with competitive interest rates and fees. But their smaller size also means they can be more flexible and innovative, and they often provide more caring and personalised service. This can make a big difference to a borrower’s happiness over the life of their loan.