Non-bank lenders say they are the cheapest

While the big banks have been bragging about their relative insulation from the effects of the global credit squeeze Challenger Financial, which funds a range of home and commercial loans for non-bank lenders, has pointed out that the figures from the Reserve Bank show that the non-bank sector has “consistently” offered lower mortgage rates than the banks over the past 13 years. Challenger's chief executive, Mike Tilley, said that recently the banks have simply disguised their rate rises by keeping their headline rates at the same level but ceasing the practice of offering discounts for new loans. Mr Tilley also said that the perception that non-bank lenders were riskier as they concentrated on low doc loans was incorrect as, over the longer term, loss rates on low doc loans were 0.039 of total advances compared with 0.045 for fully documented loans.