Online lender Athena Home Loans vows to ‘shake up’ mortgage market

A new online lender has vowed to help Aussies pay off their loans faster with a 3.49 per cent interest rate in the wake of the banking royal commission.

A new online lender launching with a 3.49 per cent interest rate is hoping to cash in on the “trust gap” exposed by the banking royal commission.

Athena Home Loans, founded in 2017 by former bankers Nathan Walsh and Michael Starkey, officially goes to market with its refinancing offer today after a “friends and family” soft launch period and a $45 million capital raise.

The fintech start-up, which is backed by Macquarie Bank, Hostplus, Square Peg, AirTree and Apex, is offering near market-leading rates of 3.49 per cent for owner-occupier principal and interest loans and 3.89 per cent for investors.

Home purchasing will be rolled out in coming months.

“We’ve got a mission to help Aussies save a whole bunch of money by helping them pay off their loan faster. We’re proudly not a bank and never will be,” Mr Walsh said.

“The banks win when customers don’t know their rate. It’s hard because many borrowers aren’t aware of what they’re paying. They think they got a good rate early and may not have noticed the rate creep over time.”

Athena Home Loans is touting a number of “home loan hacks” it claims will help borrowers pay off their loan — basically catchphrases for its features such as “stay great rates”, “f**k fees” and “refinance without the restart”.

“A lot of people put up a shiny introductory rate and sting the borrower with hidden fees and rate hikes, there is incredible frustration around that,” Mr Walsh said

He pointed to research by the competition watchdog that found on average, existing customers pay 0.24 per cent more than new customers on their home loan.

Athena Home Loans founders Michael Starkey and Nathan Walsh.

“Existing customers are subsidising new customers by hundreds of millions of dollars a year,” he said. “We are making an Australian-first customer promise that we will never charge existing customers more than new customers on a like-for-like loan”.

According to a survey of 1000 homeowners commissioned by Athena Home Loans ahead of its launch, only 25 per cent of borrowers think their lender cares about their financial wellbeing and only 21 per cent think their lender acts in their best interest.

The survey found 43 per cent of borrowers were considering switching lenders as a result of the banking royal commission.

Asked whether it was a bad time to be launching a new home loan offering given the current state of the housing market, Mr Walsh said “there couldn’t be a better time”.

“Borrowers think they’re getting a raw deal but clearly the royal commission has shone a really bright spotlight on the horrific behaviour,” Mr Walsh said. “People are saying they want an alternative.”

Steve Mickenbecker, group executive of financial services at Canstar, said the 3.49 per cent introductory offer was the third lowest rate in the comparison website’s database.

“It’s a well priced offering,” he said. “I believe 3.49 per cent is sort of a launch rate, they told us it’s going to 3.59 per cent but couldn’t say exactly when that would happen. That won’t affect people who take the 3.49 per cent.”

There are 15 loans in the Canstar database lower than 3.59 per cent available for a $300,000 loan. “It’s a reasonably priced officer, up there with UBank and HSBC,” Mr Mickenbecker said. “I think it’s another low-priced loan offering. I welcome new entrants.”

Mr Mickenbecker said the features that stood were the fee-free loans and the “loyalty discount” that builds by 0.01 per cent a year for five years, up to a discount of 0.05 per cent.

He added that Athena Home Loans, which is funded by non-bank lender Resimac Group, was “not immune” to the wholesale funding pressures that have forced major banks to raise rates out of cycle with the RBA.

“Obviously, it’s a variable-rate loan so it can go up and will go up if funding costs go up,” Mr Mickenbecker said. “Time will tell if they can sustain that advantage, but others have been able to do it — Reduce Home Loans, Pacific Mortgage, Mortgage House, Tic Toc. The low-cost model is what can help keep that price down.”

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Originally published as Online lender Athena Home Loans vows to ‘shake up’ mortgage market