The mortgage war is on

Sheyne Walsh can dispel any doubts that there is a price war going on between the big banks for mortgage market share. He says the discounts on offer are the best the market has had to offer for five years.

Walsh, who is the head of lending at financial planner Centric Wealth, says: "A few months ago the best we could do was a 50 basis points discount off the standard variable rate.

"Now we have one lender allowing us to offer discounts of as much as 90 basis points on loans up to A$1 million and 100 basis points for loans over A$2 million.

"Our view is that lenders are being selective with this aggressive pricing - picking their channels, market segments and even geographies.

"But there is no doubt it is a new level of competition."

An industry publication, The Adviser, reported yesterday that Westpac was offering selected brokers discounts of 80 basis points on loans above $500,000.

It also reported that Westpac had increased its mortgage insurance threshold from an 80 to 85 per cent loan to valuation ratio.

Westpac is also understood to be offering waivers on home loan establishment fees and annual fees.

Commonwealth Bank is promoting discounts of 80 basis points on sandwich boards outside some branches.

National Australia Bank brought the mortgage war into the open over the weekend when it announced that it would pay $700 towards early exit fees charged by Commonwealth Bank and Westpac for borrowers switching to a NAB loan.

Lenders are looking for ways to grow their loan books in the face of falling demand for business finance and weaker growth rates in home lending.