Neobank 86 400 has committed to 24-hour turnarounds as it drops its fixed rates, reduces minimum serviceability floors and introduces a $2,000 cashback offer through the broker channel.
Fintech lender 86 400, which launched its first digital home loan products through the broker channel last year, has announced that it has made a number of changes to its mortgage offering for brokers.
Effective from today (7 May), the bank has reduced fixed rates, dropped its minimum serviceability floor rate and launched a cashback offer.
The bank has now dropped rates on its fixed rate home loans.
Speaking to The Adviser, George Srbinovski, national manager of broker distribution at 86 400, said: “We’re always looking at giving customers the best possible rates, so we’re always looking at changing rates.”
He noted that the reduction brings the one-year and two-year terms to a new low of 2.24 per cent per annum for owner-occupied principal and interest loans (comparison rate of 3.02 per cent pa for the two-year fixed).
The bank has also reduced the interest rate floor for new home loan serviceability assessments from 5.50 per cent to 5.25 per cent.
Mr Srbinovski said: “The reduction allows us to continue to apply appropriate tolerances when assessing serviceability.”
The neobank also launched a new cashback offer this week.
Customers using brokers to apply for an eligible 86 400 mortgage between 4 May and 30 June 2020 will receive $2,000 cashback. The cashback is available for loans over $250,000 that settle before 31 August 2020.
Despite some lenders having experienced blowouts of their turnaround times since launching cashback offers earlier this year, Mr Srbinovski told The Adviser that he was confident the neobank would be able to continue delivering average turnarounds within 24 hours.
He said: “We are very, very confident we can maintain our service levels. Currently, our service levels are, on average, 24 hours. We are geared to continue on with that 24-hour service level.”
The head of broker said that while the bank has delivered documents to customers less than three hours after lodgement, he said that the speed of service relied on the accuracy of information submitted.
“As long as we get accurate information up front, we can have that amazing turnaround time. So our process is controlled through the broker doing ID upfront (through MaxID), doing accurate income and expense categorization. It is because we have so much accurate information up from that we are able to assess deals really quickly.”
He continued: “So, we’re going to try our absolute best to keep it within our 24-hour turnaround times, as long as we get accurate information upfront.
“Our goal is to consistently be a lot quicker than that; 24 hours is where we want to start, and we’re averaging well at the moment.”
Mr Srbinovski concluded: “This is a time when brokers and applicants are looking for certainty, and increased processing and waiting times lead to increased pressure on borrowers. Our application process gives applicants quick approval, as well as a view of where they stand financially before making such a big financial decision, which is crucial through this challenging time.”
Robert Bell, CEO of 86 400, added: “From the start, we’ve set out to be a smarter alternative to the big four, and today’s changes demonstrate that, by helping Australians get a better deal on their home loan and putting money back in their pocket, which has never been more important.”
86 400 is currently on the lender panel of SFG, Vow Financial and Buyer’s Choice but is said to be in talks with other aggregators in the hopes of extending its reach in the broker channel.
[Related: Neobank expands broker BDM team]