Prospective homeowners who are seeking for a home loan product with a reasonable value may be thinking about what the four largest Australian banks are offering. The Big Four banks are Westpac Banking Corporation, National Australia Bank, Australia and New Zealand Banking Group, and Commonwealth Bank of Australia. These vital banking institutions in Australia take up a massive share in the country’s financial ecosystem, including the nation’s profitable home loan market. Plus, since they are prominent, the Big Four banks are usually among the choices of potential homebuyers who typically include them in their loan provider shortlist.
Australia’s Big Four Banks and their Loan Offerings for Homebuyers
Based on the September 2019 information released by the Australian Prudential Regulation Authority, Australia’s Big Four banks have over $1.3 trillion in investment and owner-occupied home loans. Furthermore, according to accounting giant KPMG, these large financial institutions are dominant forces in Australia, making up approximately 81 per cent of the nation’s mortgage market.
As of September 2019, the Big Four banks have the following figures that indicate the worth of their home loans under management:
1. Commonwealth Bank of Australia – $438.5 billion
2. Westpac Banking Corporation – $411.3 billion
3. National Australia Bank – $261.2 billion
4. Australia and New Zealand Banking Group – $246.4 billion
As the Big Four banks of Australia control the home loan market, every one of them has numerous diverse loan products from which potential homeowners can select. Here are the typical kinds of loan that these financial institutions have available for their customers:
1. Line of credit home loans
2. Refinancing home loans
3. Investment home loans
4. Bridging loans
5. Owner-occupier home loans
6. Construction loans
7. Guarantor home loans
8. Low-documentation home loans
The Big Four banks have other offerings besides these eight loan products. They have a large number of home loans that most kinds of borrowers can avail of when deciding to buy the residential property they choose. However, these potential homeowners should keep in mind that the Big Four banks’ loan offerings have both advantages and disadvantages. Learning about them will enable consumers to avoid any surprises when they have already decided to take out a loan.
Weighing the Advantages and Downsides of Loans from the Big Four Banks
Prospective homebuyers will notice that, when securing a home loan, big banks, smaller financial firms, and lenders feature plenty of similarities. These loan providers all have to adhere to their obligations that relate to responsible lending. Plus, these financial companies have to obey regulations that safeguard consumer credit. Therefore, potential homeowners do not have to worry because loan providers in Australia are safe to borrow funds from in general.
Consumers can take out the loan they need for their new house with ease if they understand the mechanics of the Big Four banks’ loan arrangements. Here are some of the benefits and the drawbacks of borrowing from Australia’s four most important banking institutions:
1. Since the Big Four banks are massive, they offer a wide array of home loan products for varied borrowing requirements.
2. Innovative digital banking and dependable service are within reach for consumers, thanks to the Big Four banks for having a wealth of resources.
3. Australia’s four largest banks can generally be more flexible and lenient with their lending requirements.
Also, they have borrowing choices for consumers who might find it challenging to get a standard loan from other providers.
4. Convenience is a top benefit that consumers can get from the Big Four banks.
These financial institutions have vast networks of branches and ATMs, while smaller lenders are still in the process of going online wholly.
The Big Four banks are also ideal for consumers who prefer in-person banking.
5. A vast range of beneficial features is accessible from Australia’s four largest banks, which include redraw facilities and offset accounts.
6. The Big Four banks offer many package offerings, giving rebates for consumers who bundle products into a single package with the same financial firm.
1. When it comes to their basic home loan offerings, the Big Four banks of Australia tend to have higher rates on the market.
2. At the Big Four banks, consumers might not be able to obtain personalised service at a similar level compared to at the smaller financial institutions. Plenty of these banks base their whole enterprise model around being efficient and quick online.
3. The Big Four banks’ loan offerings for potential homebuyers and their other banking products have fees that can be higher on average.
Some consumers may find the advantages and disadvantages of securing home loans from the Big Four banks as acceptable. However, for those who are otherwise, they have the option to borrow funds from alternative loan providers.
Alternative Providers for Homebuyers Seeking Low-Rate Loans
The interest rates for home loans that the Big Four banks offer are well-known to be higher compared to those from the other lenders. This fact, however, should not deter prospective homeowners from securing the borrowed funding they need. The following kinds of loan providers offer low-rate loans and can help consumers in buying the residential property that they desire:
A) Non-bank lenders
These financial institutions do not hold the license called ‘Authorised deposit-taking institution’ or ADI. Hence, non-bank lenders cannot offer deposit products that most banks do, like transaction accounts, savings accounts, offset accounts, or term deposits. But they can still provide prospective homebuyers with some competitively priced home loans.
B) Customer-owned banks
These financial firms, which also have the name ‘mutual banks,’ have the sole objective of providing banking services to clients instead of generating a profit. Customers may get better rates and fees from customer-owned banks as well.
Potential homebuyers can anticipate digital banks to offer home loans soon. These up-and-coming financial technology companies offer some highly competitive rates, and a few of them provide loans for homebuyers. Examples of these neobanks are Judo Bank, Up, Volt Bank, and 86 400. They promote themselves as affordable and quick digital alternatives to traditional banking.
D) Other retail loan providers
These are the largest retail banks apart from the Big Four banks. They have billion-dollar-worth of loans under management. Examples of these retail financial firms are Bendigo and Adelaide Bank, AMP, ING, Macquarie Bank, and HSBC.
Prospective homebuyers can tell apart home loan products based on the interest rates. This assessment can also comprise the comparison rate. Plus, they should look into the fees and features of the loan offerings of the Big Four banks and the alternative loan providers.
They will surely find a suitable offering from each of the companies, particularly those of reasonable value. This great find of a home loan can allow potential homeowners to avail of that residential property they have long desired to acquire quickly.