Start-ups look set to be a beneficiary of a new battle for share in the mortgage market, after NAB offered to pay $700 towards the exit fees of customers switching from Commonwealth Bank or Westpac.
NAB’s move, six months after it scrapped home loan exit fees, will be a sigh of relief for many start-ups, as home loans are often used to secure funds from banks.
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But whilst the offer of $700 may seem attractive to small business operators, Choice spokesman Christopher Zinn says they need to ensure they’ll benefit from the switch in the long term.
“If you really crunch the numbers you may well find that there may be another offer, that in fact, even if you pay an exit fee, over the life of the loan would save you money?” he says.
However, Zinn says NAB’s actions are to be applauded, adding: “NAB saying they will do this is really the nail in the coffin of exit fees.”
But despite the optimism provoked by NAB’s move, business borrowers won’t be able to access the same exit fee deal.
“The banks fight for consumer customers harder than they fight for business customers.” Zinn says. “Unfortunately for small business, it means they often miss out on these offers.”
Last year NAB scrapped exit fees on their own businesses loans, prompting competitors to do the same. But, like personal home loans, Westpac and CBA are yet to drop exit fees for mortgages.
When asked about the potential for NAB to pay a competitor’s exit fees for business loans, a spokesperson says it didn’t have any such plans at present.
The decision by NAB to lure new mortgage customers with exit fee subsidies will be costly, but the bank is confident the push for market share will prove fruitful.
Lisa Grey, head of personal banking at NAB told the ABC on the weekend “It’s a sound commercial decision and I’m very confident that we’ll continue to grow and that we’ll ensure that it makes a lot of business sense” adding that, “If it’s good for the customers, it’s good for business.