The Commonwealth Bank of Australia has launched a new digital home loan lender that offers customers an annual loyalty discount and competitive rates.
CBA’s new digital home lender, called Unloan, is offering two products – an owner-occupier loan starting at 2.14% and an investor loan starting at 2.44%, with both loans offering a 0.01-percentage-point discount every year for up to 30 years.
Unloan is currently only available to refinancers, but the lender is set to open it up to new borrowers. Loans will require an LVR of less than 80%.
The loans will have a redraw facility but no offset account. Interest-only loans will not be offered.
The digital-only offering claims an application will take as little as 10 minutes.
RateCity.com.au analysis showed that if the average owner-occupier with a $500,000, 25-year principal and interest loan refinanced to the 2.14% loan from Unloan, they could save up to $9,306 in interest in the first two years and $24,194 over the first five years. This includes switching fees, the loyalty discount, and the forecasted rate hikes.
By comparison, if the same person refinanced to the lowest rate on the market of 1.79%, they would save roughly $11,783, in interest after two years, and $31,256 over five years, using the same assumptions, RateCity.com.au said.
Sally Tindall, RateCity.com.au research director, said Unloan “is an impressive new offering from Australia’s biggest bank.”
“Not only is the rate extremely competitive, it also comes with a loyalty discount and speedy application process which could be enough to push even the most complacent borrowers into refinancing,” Tindall said. “These loans from Unloan won’t be for everyone as refinancers will need to own at least 20% of their home and also won’t have access to an offset account.”
Analysis of the RateCity.com.au database showed that two other lenders currently advertise a loyalty discount, and both are relatively new entrants to this space, Athena and OneTwo Home Loans.
“Greater competition in the sector will deliver better outcomes for borrowers, not just in terms of rate but also in relation to customer experience and innovation,” Tindall said. “Refinancers want a competitive rate but without endless forms and paperwork. Faster application times and more streamlined processes are all likely to boost refinancing activity and keep a healthy amount of pressure on the marketplace.”
