The Bank of Melbourne is launching an aggressive push to turn around sluggish demand for home loans from new customers.
The bank, owned by Westpac group, will offer mortgage discounts of more than 130 basis points, which is substantially more than recent discounts offered by main rival the Commonwealth bank.
Mortgage brokers say if Bank of Melbourne has success with the offer, Westpac’s other brands BankSA and St George will likely follow suit.
The move is at odds with some other rivals such as NAB which has positioned itself away from aggressive discounting with the aim to rebuild existing borrower relationships.
Their CEO Andrew Thorburn said the NAB was focusing on rewarding loyal customers rather than chasing new ones.
Westpac themselves are also set to announce large discounts for borrowers who have deposits of up to 40 per cent, and smaller discounts for smaller deposits.
The discounts can be seen as a direct response to slumping auction clearance rates and demand for investor and owner-occupier loans.
While home loan demand in September has been the weakest in four years, lower prices, less buyer pressure and more choice to negotiate means more first-home buyers are being attracted to the market.
The new Bank of Melbourne offer targets borrowers in its Advantage Package, which offers the 130 point discount for new loans, loan increases or for borrowers switching from other lenders.
Borrowers with an LVR above 80 per cent will be eligible for even more discounts.