Mortgage Choice and Athena launch loan without the ‘loyalty tax’

Last year, Mortgage Choice and direct-to-consumer lender Athena announced they were partnering to “bring together Athena’s industry-shifting home loan products with the scale and distribution network of the Mortgage Choice brand”.

After having consulted with Mortgage Choice brokers through a working group and running a broker pilot earlier this year, the Mortgage Choice Freedom product suite, powered by Athena, officially launched today (19 June).

There are three products in the Mortgage Choice Freedom suite: a variable rate, Mortgage Choice Freedom Saver; a fixed rate, Mortgage Choice Freedom Fixed; and a split loan, Mortgage Choice Freedom Flex.

The suite aims to provide greater transparency and ‘a fair go’ to mortgagors, automatically dropping a variable borrower’s rate when they move to the next loan-to-value ratio, not charging any lender fees, and working to ensure existing customers aren’t charged more than new customers (known colloquially as the ‘loyalty tax’).

Indeed, Reserve Bank of Australia data revealed that back-book customers pay, on average, 41 bps more on their mortgage than new customers.

Athena estimates that this ‘loyalty tax’ will cost Australians $8.9 billion this year alone.

Speaking of the new suite, Mortgage Choice chief executive Anthony Waldron said: “Mortgages are widely recognised as the biggest monthly expense for households in Australia.

“With 12 interest rate rises since May 2022, and more potentially on the horizon, it’s more important than ever that lenders are giving borrowers a fair go.

“Historically, Australian banks haven’t rewarded borrowers for their loyalty — in fact, long-term customers often watch in disbelief as the bank they’ve been loyal to for years offers new customers much lower rates and other deals like cashback offers.

“With Mortgage Choice Freedom, it won’t matter if you’re an existing customer or new, you’ll receive the same rate on a like-for-like variable loan.”

The Mortgage Choice CEO added that the broker network had been “deeply involved” in the white label suite’s design and development, with 100 brokers piloting the product suite in April.

“Early in the partnership we established a broker working group which was heavily consulted throughout the project, right down to the value proposition for brokers and their customers,” he said.

“These three Mortgage Choice Freedom products are just the beginning. We are working with Athena on an ambitious roadmap and are looking forward to delivering even more value for Australian borrowers over the coming months.”

Speaking of Athena Home Loans’ first white label product launch in the broker channel, CEO and co-founder Nathan Walsh, stated: “Our purpose is all about helping Australians get rid of their home loans.

“We know that Athena’s innovative home loan products resonate with a lot of borrowers in the market. However, these borrowers often want expert advice on all their options from a professional they trust.

“With almost 70 per cent of Australians now using a mortgage broker to source their home loan, it made a lot of sense for us to partner with Mortgage Choice — which has been a trusted name in broking for more than 30 years.”

Mortgage Choice brokers can now access the product using custom-built version 2.0 of Simpology’s LoanApp lodgement technology for Mortgage Choice Freedom, which can reportedly lodge loans in around eight minutes.

[Related: Direct-only lenders embracing broker strength]