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Mozo offers borrowers up to 1% discount in gimmicky ‘mystery’ variable home loan deal seemingly through Commonwealth Bank
Mortgage comparison website Mozo is offering its members the opportunity to secure up to 1% off the advertised variable rate of a big four bank in a “mystery bank home loan deal”, but the deal does not seem much sweeter than what borrowers who take up advertised packaged home loan offerings can secure.
“This month we're excited to launch Australia's first ever Mystery Bank home loan deals, exclusively for Mozo members! Right now, a Big 4 Bank is offering Mozo members a secret rate discount of up to 1%, in an amazing value deal that could save you over $100,000,” says Mozo in its promotional material.
Savings are calculated on the current Mozo Mystery Bank variable rate of 5.93% for a $500,000 loan, versus the current average big four bank standard variable rate of 6.82% and assumes a loan term of 25 years.
The bank involved is a mystery, although it appears to be the Commonwealth Bank.
The comparison website has not revealed the identity of the lender, but calls made to the big four banks by the Herald Sun yesterday resulted in outright denials of involvement from Westpac and ANZ, while the NAB noted it had been keen to explore opportunities with Mozo but has "taken the decision that this is not commercially sustainable at this time".
Commonwealth Bank would neither confirm nor deny its involvement in the offer.
After publication by Property Observer this morning, a spokesperson for Commonwealth Bank said the bank would not comment.
Publicly, the Commonwealth Bank has an advertised standard variable rate of 6.8% with a full offset option.
It offers a 0.8% discount for all customers who take up a packaged offer ( a rate of 6%), which includes some savings on banking fees, a Mastercard credit card with no annual fee but also comes with an annual fee of $375. To be eligible loan balances must be at least $150,000.
Mozo managing director Rohan Gamble is promising huge savings of more than $80,000 over the life of a $500,000 loan or $277 a month when compared with the average big four bank standard variable rate.
But critics suggest the promotion appears to trivialise what is an important financial decision for most borrowers, comparing it with “ ‘mystery hotel’ deals – where five-star hotel rooms can be booked at a huge discount".
A press release issued by Mozo suggests the main winner will be the bank involved.
"The mystery bank service allows the banks to grab fast market share by offering time limited, exclusive deals to rate sensitive borrowers who want to be with a trusted lender," says Gamble.
"In return, the banks get access to a new source of quality customers without having to broadcast cheap rates to the entire marketplace."
"Unlike mystery hotels, you do find out who the bank is before you apply," adds Gamble. "So you have plenty of time to change your mind.
"But you won't find this level of discount being offered openly by any of the big banks. And the rates are so good that you won't find them every day."
Research by Property Observer reveals that all the other major banks are also offering large discounts for borrowers who take up the package offerings.
In addition, rival mortgage comparison website RateCity, says there are almost 400 variable home loans in its database offering a discount of up to 1.75% for either the life of the loan or a short period.
NAB offers borrowers a 0.7% discount off its standard variable rate for loans of $250,000 or more if they take up its package offering.
Westpac is offering a 0.9% variable rate discount for borrowers who take up its Premier Advantage Package offering. Total borrowings must be $500,000 or more.
ANZ is offering a standard variable rate discount of up to 0.8% for total lending of $500,000 and above and up to 0.7% off the standard variable rate for total lending under $500,000 as part of its Breakfree package.
To become members of Mozo and participate in the offering, borrowers only have to enter their contact details and await a phone call from a Mozo “home loan expert” – Mozo holds its own Australian credit licence – who will provide “factual information” about the loan and then refer borrowers on to the bank.
The offer is available for both new borrowers and those looking to refinance with participants asked to have details of their loan provider and home loan product, property details and employment details handy.
The discount applies to loans up to $1 million and is for a loan product that includes an offset account.
Mortgage products that include an offset account reduce the interest you pay on your home loan by offsetting the balance in your offset account against the balance of your home loan.
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