Tins of Tuna, Cheap Flights and Home Loans

Graeme Salt

It’s hard to believe it but there is a link between Jetstar, Aldi and home loans.


 


We all know that Qantas owns Jetstar and Virgin owns Tiger, and that these brands offer cheap services.


 


Similarly, we all know that Coles and Woolworths offer Home Brand products that compete against the premium brands where they enjoy bigger margins. But did you know that some banks operate on this principal? There are cheaper lenders out there who compete directly against their parents.


 


Some of these brands like St George (owned by Westpac) and Bankwest (owned by Commonwealth) are household names. Others, such as Choicelend (owned by NAB) are only available through brokers. In all cases, they can offer better rates than their parents.


 


When it comes to aviation, Qantas, Virgin and their subsidiaries are pretty-much the only shows in town. It’s similar for supermarket with Coles and Woolworths who apparently, aim to move to an overall market share of roughly 20-25% for home brand products in each category. One of the main reasons they do this is to keep no-frills alternatives such as, IGA and Aldi, at bay.


 


Some banks are also applying this strategy; even though the Big Banks know there is a chance their cheaper alternative will eat into their own core market, their main goal is take on other second tier lenders like Suncorp, Bendigo and Bank of Queensland. Even with this strategy CBA remains the market leader, with $305 billion of home loans. Of which $44 billion has been arranged by Bankwest – hardly a trifle.


 


NAB has consistently been cheaper than CBA, Westpac and ANZ. Yet, NAB’s subsidiary Choicelend is even cheaper than its parent – with rates currently as low as 4.34 per cent. The main beneficiaries of this strategy are customers.


 


I recently had a meeting with Bankwest executives who made it clear to me that they were very happy to challenge all banks including their parent. And that they were trying to do this with better rates and services.


 


The good news for customers is that they can go to a Bankwest or St George and get a better deal than if they want to the parent company. And, they can get all the bells-and-whistles offered by a big bank.


 


So, if you are borrower, what are you waiting for? Your broker knows which banks are offering the best rates – and you don’t have to pay them for finding you a good deal.


 


Graeme Salt is a Sydney-based mortgage broker.  For a no-obligations consultation, please contact him on 02 9922 5055