by Jenny Ruth
While it is offering a special launch rate of 7.29% fixed for 21 months, unlike other lenders trying to challenge the supremacy of the major banks, Superbank isn’t generally trying to beat the mainstream home lenders on price. But a significant feature of its offer is that it will reward existing customers with lower rates over time.
SuperHomeloan customers receive an increasing discount over time against the interest rate applied to their mortgage, up to 0.6% per annum.
The rate on a $210,000 home loan taken out at 7.5% would decline to 6.9% (assuming no other changes in the market) over 20 years, saving the borrower $10,000 over the life of a 25-year loan, Superbank says.
Chief operating officer James Munro says other banks spend all their efforts on attracting new customers and do little, if anything, to reward existing customers.
The average term of a home loan in New Zealand is now below four years and it’s about two-and-a-half years in Australia. "That promiscuity really hurts. The acquisition of new business costs much more than retention of existing customers," he says.
Superbank’s special 21-month fixed rate compares with the between 7.25% and 7.3% the mainstream banks are currently offering for one-year fixed loans and between 7.4% and 7.6% which they are offering for two-year fixed loans.
On other periods, Superbank is offering from 8% for a variable rate loan through to 7.8% for a five-year fixed rate loan, which is comparable to the rates offered by the mainstream banks.
The bank, which is a joint venture between Australia’s St George Bank and Foodstuffs, which operates the Pak’ N Save, New World, Four Square and Write Price supermarkets, will promote the loans through through the supermarkets and a call free number and it will have some mobile managers of its own.
But a major distribution channel will be through six of the leading mortgage broking firms, Mike Pero Mortgages, Mortgage Choice, Mortgage Express, Mortgage Link, Mortgage People and Ray White Financial Services.
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