Banks are changing the way they fight the mortgage war

for the third Reserve Bank board meeting in a row this week, but beneath the surface, major changes are brewing in the mortgage market.

Before getting to these changes, however, it’s worth revisiting how we got here. This time last year, profits were being crunched and bank executives openly complained about some of their competitors writing new loans at unsustainably low interest rates.to lure new borrowers or refinancers. Some of the most competitive interest rates in the market were also wound back.

Many bank-watchers say competition has eased off slightly compared with the peak last year, though it’s still squeezing bank shareholder returns. Second, the two banks that most obviously tried to sit out the period of intense competition, Commonwealth Bank and National Australia Bank, have lost market share in home loans.

Chief executive of digital mortgage broker Finspo, Angus Gilfillan, says making Bankwest purely digital will lower its costs to compete, and he suspects one reason for the change was to take on Macquarie head to head. “Removing physical distribution and leveraging brokers puts the cost base on an even footing with Macquarie,” he says.In the current environment, where banks are trying to be more picky about how they compete, wrangling a better deal out of your lender may take a bit more effort.

Source: News Formal (newsformal.com)

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