Bank to fuel broker ‘momentum’ with sharp rate cuts

For new owner-occupied mortgages with a loan-to-value ratio (LVR) of less than 90 per cent, Adelaide has reduced rates on its SmartFit and SmartSaver products by up to 34 basis points, with rates now starting from 3.87 per cent (4.09 per cent comparison rate).

The lender has also dropped fixed rates on its SmartFix owner-occupied product by up to 20 basis points, with rates now starting from 3.79 per cent (4.28 per cent comparison rate).

Adelaide Bank’s sharpest reductions, however, are to its investor home loan products, with the bank cutting rates on both its SmartFit and SmartSaver products by up to 92 basis points.

Interest rates on investor home loans offered by non-major banks now start from 3.99 per cent (4.21 per cent comparison rate).

Investor fixed rates have also been cut, with rates now starting from 3.99 per cent (4.48 per cent comparison rate).

Speaking to The Adviser, Adelaide Bank’s head of third-party banking Darren Kasehagen said the lender aims to capitalise on mortgage growth via the broker channel.

“We’re looking for continued growth in the broker space,” he said. “We’ve got quite a lot of momentum in that space.”

He added: “We’re getting some good growth, especially in that investor P&I space, and we think we’ve got capacity to grow in that space.”

Bendigo and Adelaide Bank reported a $200 million half-on-half increase (or 0.95 of a percent point) in its residential mortgage lending portfolio in the first half of the 2019 financial year (HY19), taking the size of its loan book to $21.3 billion as at the end of December 2018. 

Of the $15.9 billion in total mortgages generated through the third-party channel (as at 31 December 2018), mortgage managers accounted for $12.3 billion, while mortgage brokers accounted for $3.6 billion.

Following the release of the financial results, Bendigo CFO Travis Crouch said: “We have continued to see improvements in activity through our third-party lending business as the industry sees more customers using these channels and we return to more natural level of flows, particularly through our mortgage manager partners.”  

Adelaide Bank’s rate cuts follow interest rate reductions of up to 50 basis points from Teachers Mutual Bank (TMB) and its subsidiary brands.

The banks have cut mortgage rates despite several out-of-cycle interest rate hikes from lenders throughout 2018 and since the turn of the year.

MyState, NAB and its subsidiary UBank, Macquarie, the Bank of Queensland, Virgin Money, and ING have all announced rate increases since the start of the year, off the back of funding costs pressures.

[Related: TMB cuts mortgage rates by up to 50bnps]