Extended loan terms available through channel
RACQ Bank is responding to market conditions such as rising interest rates and cost-of-living pressures, with extended loan terms among the options now available through brokers.
A member-owned bank, RACQ (Royal Automobile Club of Queensland) Bank formed in the early 1900s, initially as an advocate for motorists and improving road safety.
Following a pilot with direct brokers in 2022, RACQ Bank confirmed on March 28 that it had signed up with aggregators Specialist Finance Group (SFG) and Astute Financial Management, bringing its offering into the broker network for the first time.
An e-lodgement platform, developed through a partnership with fintech Simpology, provides brokers with integrated third-party services such as digital consent, electronic statement collection, digital ID and DocuSign, the bank said.
RACQ chief executive banking Michelle Winzer (pictured above) said in March that in line with its commitment to doing things differently and supporting Queenslanders through current market conditions, RACQ Bank had introduced a range of lending options.
Extended loan terms of up to 40 years are available, while its Fair Dinkum Home Loan reinforces demand for “back-to-basics products”, she said.
The bank can provide competitive turnaround times, with a “time to yes” for home lending of seven days (conditional approval within 48 hours), she said. Additionally, the bank was offering a $2,000 cashback for new refinances of $500,000 plus, through direct and broker channels.
Options to aid cost-of-living pressures
Talking to MPA about the bank’s offering, Winzer said its members were increasingly considering different options to mitigate cost-of-living pressures.
This included reviewing their property value to check if they were eligible for a reduction on their loan to value ratio (LVR), and extended loan terms of up to 40 years.
“We are one of the few banks in Australia to offer extended loan terms of up to 40 years to help younger Queenslanders achieve their property goals in the current market conditions,” Winzer said. “This option increases the borrowing capacity for members, thanks to lower repayment options.”
Winzer confirmed that mortgage borrowers could apply for a loan term of anywhere from 30 to 40 years, depending on their needs.
“This could mean a 31-year term for members to assist with reducing the repayments and importantly they can always pay the loan off sooner should their circumstances change, to reduce the amount of interest paid over the full term,” Winzer said.
Discounts to interest rates
In addition to extended loan terms, Winzer said that over the last year, the bank had introduced member discounts on advertised home loan rates, a new low-rate home loan, and an under 60% home loan tier.
“Our response to the rising cash rate has also been different to the majors and the regionals – in October, we made the decision to not pass on the full rise to our home loan members,” Winzer said.
“In November, we delayed the effective date to give our members more time to prepare for the change and to ease their financial pressures over the festive season.”
The bank said that expansion into the broker network was part of its strategy to assist Queenslanders with their property goals.
Given that broker market share of new residential lending had reached almost 70%, Winzer acknowledged the role of brokers in helping Queenslanders on their home buying journey, particularly in a rising interest rate environment.
“The launch of our broker channel, designed to complement our existing mobile lending and growing digital offering, will give our members more choice and flexibility when it comes to applying for a mortgage,” Winzer said.
Commenting on the bank’s partnerships with SFG and Astute, Winzer said SFG was an established and longstanding aggregator with excellent growth, while Astute’s values around broker training and a connection with the local community aligned with the bank’s.
Winzer described the bank’s offering as competitive and exciting for brokers.
“We know the Queensland market and have a dedicated local team on hand to support our broker partners,” she said. “We’re thrilled about this next chapter for RACQ Bank and look forward to working with the broker community.”
