Tokyo-based Sony Bank investigating online mortgage lending in Australia

Tokyo-based Sony Bank, a division of financial services group Sony Financial Holdings, has won APRA approval to undertake a feasibility study about setting up an online mortgage lending operation in Australia.

Sony Bank operates as a low-cost branchless bank in Japan.

The bank plans to use deposits raised in Japan to fund its mortgage lending in Australia, according to a report in The Australian Financial Review.

Yellow Brick Road executive chairman Mark Bouris – who took on the major banks with Wizard Home Loans in the late 1990s – says the Australian banking sector appeals to overseas banks because of attractive profit margins and low mortgage arrears.

Foreign-owned online banks have already had success in Australia, with ING Direct – a division of Dutch-owned financial services giant ING – launching in Australia in 1999 and growing to be the country’s fifth biggest lender with a mortgage book in excess of $38 billion.

In 2008 NAB launched low-cost online offering Ubank, which currently has one of the lowest advertised variable mortgage rate at 5.62% for those refinancing their mortgage.

Other foreign-owned banks with a mortgage foothold in Australia include Citigroup ($8 billion loan book) and HSBC Bank Australia ($7.5 billion)

The big four banks – NAB, ANZ, Commonwealth Bank and Westpac – have more than 90% of the mortgage market and cemented their control of mortgage lending by opportunistically buying up some of their smaller rivals in the wake of the GFC.

Japanese banks are targeting overseas markets for growth due to the contracting lending market in Japan.

Japan’s three biggest banks – Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Financial Group and the Mizuho Group – already provide corporate loans to companies in Australia.