12 April 1999
A swag of new providers are lining up to cream the top off the online market in home loans, with some ambitious targets set, while at least one major bank, Westpac, is claiming significant numbers of new home loan approvals from the Internet.
Westpac head of Internet Services Mr Jonathan Poole said the bank only promoted its Internet lending service to existing customers.
He declined to name volumes but said Westpac was "very happy" with the results.
The service brings in new loan applications "equivalent to what five to 10 branches per month would generate", he said.
Consumer finance lender Liberty Financial has just launched LoanNET, a finance application and approval system. LoanNET is acting as a mortgage broker for Interstar Securities, a wholesaler of AAA-rated funds, and Liberty Financial says the technology used allows for instant online approvals.
"As long as the application data can later be verified through the normal checks, the applicant knows that he or she will definitely have the loan. Previous systems provide general information and allow the customer to apply online but the application process then resumes in the old fashioned manner following a return call," said Liberty Financial manag- ing director Mr Sherman Ma.
LoanNET is offering a standard variable rate of 5.7 per cent per annum with a nil application fee but it charges a self assessment fee, a valuation fee and legal fees.
Australia's second-largest non-bank lender, Wizard Mortgage, plans to spend up to $1.2 million to promote a new Internet loan application and research service launched over the weekend.
Wizard executive chairman Mr Mark Bouris considers its major competitor for the new service to be the Adelaide-based Eloan, Australia's first Internet-only home loan originator, a company that managed to pull in $30 million in new home loan applications in its first month of operation in March this year, with no advertising.
Mr Bouris said Wizard had a target of $50 million a month in new loan applications after the first three months of operation.
The service, called ewizard, is being marketed as an "accessible and non-judgmental forum through which borrowers could research and apply for a loan". At the same time it allows Wizard, which will not be offering any "honeymoon rates", a low-cost, high-distribution base to continue to compete in a low-margin environment against the banks.
"Competition in lending is fiercer than it has ever been, so lenders must find cheaper ways of doing business," he said.