3 December 2000
GONE are the days of cringing before a bank manager. In the cyber age, he's coming to you.
Richard and Kathryn Lowe went home-loan hunting through the internet, rather than a bank manager, and picked up a cheap loan by putting their specifications on the net.
They used the BestBid website (www.bestbid.com.au) where financial institutions bid against one another for your debts.
``It can save you a lot of money," Mr Lowe said.
``I had already checked out what type of loans were available to us and it was a big effort."
He picked a variable rate loan for $249,500 at 8.07 per cent but with a honeymoon rate of 7.17pc for the first 12 months from ANZ.
The website's business development manager Clare Clendinning said: ``We're different from other such sites in that the banks come to the customer and bid for the loan.
``It's a more competitive environment than other online financial services and the customer gets the rewards."
Potential borrowers enter their details (which are revealed to the winning bidder only) and interested competing lenders then will respond.
BestBid culls from the 11 lenders on its books a shortlist of three, letting the borrower pick the most suitable.
The lender also foots the bill for using the service.
During the past 12 months many online lenders have faded into internet oblivion. But analysts say it is due to weak internet sites rather than a lack of demand.
``Of the 10 to 12 home loan sites that were operating a year ago, only four or five are still trading," LoanNET spokeswoman Helen Toy said.
Ms Toy said sites had failed because they did not provide a comprehensive range of features and options and had been founded by people who had limited financial experience.
``Sites that were set up by companies that deal with lending have a lot of back-up and experience to draw upon," she said.
``The sites that have more of a financial background behind them have survived."
E-loan, the Australian online mortgage broking service partly funded by Rupert Murdoch's News Corporation, sacked the bulk of its staff in September and has trimmed its operations following lower than anticipated loan volumes.
The Commonwealth Bank's HomePath site has been a runaway success since it was launched in mid-May, dispensing more than $90 million in home loans. But then it under-cuts its parent bank's rates.
Ms Toy predicted net mortgages would grow in popularity.
``It's an area for the future; we are definitely going ahead with this area," she said.