Ms Tindall said Virgin offers a 3.69 per cent rate for new borrowers.
Other lenders are expected to follow despite concerns about falling borrower demand and the slowing real estate market.
Interbank rates, which are interest rates on short-term loans between banks, have jumped more than 32 basis points in the past 11 months.
Bank of Queensland triggered a round of rate rises late last year that resulted in four of the top five banks increasing borrower rates. It also announced an out-of-cycle rate rise in 2016. National Australia Bank has held headline rates steady
Shadow bank grab
The rate rises are expected to increase the number of borrowers switching to shadow banks, which cannot take deposits, and neo banks, which are 100 per cent digital and reach customers on mobile apps and personal computers.
Shadow banks are grabbing property market share from the majors with rates nearly 80 basis points cheaper and faster loan approval, analysis of rates and conditions shows.
The banks are growing at two-and-a-half-times their rivals but still account for only 9.5 per cent of the mortgage market, according to analysis.
Heritage Bank chief executive Peter Lock is warning that neo-banks could be “wolves in sheep’s clothing” for borrowers that do not qualify with mainstream lenders. Heritage is the nation’s second largest mutual.
Mr Lock said many neo banks were being founded by “big investors whose appetite for profit was just as strong as the big banks themselves”.
“Forget the hype about neo banks – mutuals are the tried and tested alternative,” he said.
“Unlike many neo banks, mutuals aren’t owned by big investors looking to make a profit. If you’re turning to them to escape the profit-maximisation excesses of the big banks, then you should think again.”
A spokesman for Xinja, a neo bank, defended their emerging role.
“Neo banks are already big in the USA and UK,” she said.
“The main thing about neos is no old style banking costs — no bricks and mortar branches, no legacy banking IT systems, and no old style banking models. Xinja is using feedback from people to help build its bank, and wants to provide better banking, better money management,” she said.
She added Xinja is a 100 per cent independent, Australian-owned start-up.
from Viral up Blog http://bit.ly/2H8oLZH
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