how online lenders have transformed the mortgage market over the past decade


It had been a long time since the big traditional bank was Australia’s only option for mortgage providers. Online lenders have forged their own path in the industry for many years now, offering some of the most competitive interest rates and fees in the marketplace.

RateCity met Marie Mortimer, Managing Director of, one of Australia’s premier and largest online lenders, to discuss the evolution of the mortgage market and online lenders in honor of its 10 years in business.

But first … a history lesson

One of the few women to take a leading role in the financial industry, Marie Mortimer has turned into a company with $ 6 billion in home and auto loans on the books.

She envisioned a website that could connect retail clients directly to wholesale mortgage lenders. For Ms Mortimer, this was a one-stop-shop to step in and automate, as no one else was offering a complete, end-to-end home loan application tied directly to a credit system.

“To be honest, we started from scratch. We discovered early on that Australians were more than willing to buy their home loans online. Since then our business has grown rapidly, ”Ms. Mortimer said.

“ was designed for retail clients to have access to what was previously a wholesale lender for home loans. “

“In our business, everything from application to credit assessment, settlement and beyond had been developed in housing using our own proprietary technology.

“We also offered the lowest interest rates in the country because we did not have physical branches. We used the technology to empower the customer and the savings went straight to them, ”Ms. Mortimer said.

Customer impact of savings

RateCity’s database shows that, on average, online-only lenders offer a lower homeowner mortgage rate (principal and interest) than the Big Four banks.

The average rate of online lenders for this type of loan is 2.36%, while the average rate of the big four banks is a percentage higher at 3.55%. And there’s a reason online lenders may offer lower interest rates to customers on average.

“Online lenders don’t have the overhead costs that big banks have,” Mortimer explained.

“We need to be smarter in our technological choices, as this not only enables our customers, but also our employees to make quick decisions. We use technology to reduce our overheads because we don’t have the big budgets of the big banks. “

“By reducing our costs in all aspects of our business, we can pass these savings directly on to the customer in terms of some of the lowest interest rates in the country,” said Ms. Mortimer.

And it’s not just the lower average rates or clever uses of technology that are turning Australian borrowers away from traditional in-branch mortgage customer service. Unless you rely on face-to-face banking service, it might not be better for your financial situation to pay the extra fees that lenders charge for keeping branches open.

“No one wants to spend forever paying for their home or car loan… their bank,” Ms. Mortimer said.

“It’s faster to go online and do it all, with our turnaround times being one of the fastest in the country, so clients can just get back to doing fun things, not financial things. “

A lot can change in a decade

With the increase in our dependence on smartphones, the way we do banking has been forced to adapt to become more technologically advanced. This is where online lenders such as have gotten a head start over traditional lenders in Australia.

“I think technology has had the biggest impact on the lending industry. When we launched there was not really any other competition in the online space, ”Ms. Mortimer explained.

“We have seen a number of entrants come into the market and that has really challenged the big banks as they have had to look at themselves and make some changes to move online as well. We’re really starting to see technology change very quickly not just in lending, but in finance in general. “

The Roy Morgan’s latest data shows that banking applications (via mobile or tablet) are the banking channel attracting the highest level of customer satisfaction in Australia with 89.6 percent. This far exceeded bank branches (84.3%), which may only continue to grow over the next few years.

“I think the consumer has changed over the past 10 years. We’ve seen them move away from their traditional lenders and have the confidence to try another online lender, ”Ms. Mortimer said.

“Technology, like smartphones, has enabled this as customers move away from bank branches. They now have information at their fingertips (or thumbs), and they can make informed decisions quickly. The big banks have had to keep up with this development and therefore we see them innovating. “

And it’s not just online lenders that are shaking up the credit market, app-based lenders – also known as neobanks – looking to take their piece of the pie.

Although not all neobank stories have been successful, Xinja returning funds to clients and quit the industry at the end of last year, their emergence in the credit market indicates that customers are hungry for banking channels outside traditional branches.

“[In the last ten years] we have also seen the entry of more competition into the online space, which is good for competition in the banking industry in Australia. The more businesses talk about alternative lenders to traditional banks, the more competitive the industry is, which is great for Australian homeowners, ”Ms. Mortimer said.

Global events, such as the COVID-19 pandemic, have also played their part in transforming the mortgage industry over the past decade.

“Obviously, more recently, COVID has had a big impact on our industry. To keep our economy moving, the government introduced the term finance facility. “

“We’ve seen the big banks have the edge and come into our market and compete with each other, but at the same time, it means more Australians are talking about their home loans,” Ms. Mortimer said.

Avoid the bank loyalty tax

Portrait of a stressed woman looking at financial bills

Speaking of big banks, it’s no secret that the country’s four biggest – CBA, Westpac, NAB, and ANZ – still hold the market share for home loan clients.

And that’s not surprising, as many Australians tend to stick with the one bank they’ve been with since they were kids.

While this may be the best option for some Australian customers depending on their personal financial needs and budget, if you’ve never stopped thinking about your banking products, your loyalty can come at a cost.

The Reserve Bank of Australia discussed the loyalty tax phenomenon in February 2020, in which Governor Philip Lowe pointed to data at the time indicating that home loan customers who had been with their bank for four years or older paid an average variable rate 41 basis points higher to new customers

So what can be said to Australian banking customers who have never shopped and compared their financial products?

“I think there is a misconception that online means DIY,” Ms. Mortimer said.

“At, we use technology so that the customer is not confused. We have a very clear step-by-step process through our award-winning onTrack app, but we also have great people supporting our customers throughout the process. We have taken a very personal approach to our clients.

“They’re assigned a loan specialist who looks after them through the whole process, so they’re not talking to a big call center, they’re getting something akin to a private banking experience.

While loyalty can be an admirable trait, the data shows that it may not pay off when it comes to your personal finances. There are pros and cons to considering choosing a lender online, and it can be worth comparing your options today.

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