NRMA to offer home loans funded by Bendigo Bank

The standard variable interest rate for owner-occupier loans through NRMA Insurance is 5.83 per cent. Customers are eligible for a 0.10 per cent reduction in the rate. With the discount, pricing is similar to Commonwealth Bank’s direct-to-customer digital home loan, Unloan.

Bendigo will pay a small amount to NRMA for sourcing the loans.

NRMA Home Loans will not be available via mortgage brokers. They will be launched in all states other than Victoria, where IAG still operates under the RACV brand.

Ms Batch said NRMA Insurance did not have a specific market share target.

“For us, the revenue will be modest, and is not material – it is more about building a stronger insurance relationship,” she said. “We are 100 per cent focused on insurance and adding a product can do more for them, and we hope they stay with our brands for longer.”

Tic:Toc founder Anthony Baum said the dynamic was an example of an emerging theme known as “banking-as-a-service” or “embedded finance”. He described NRMA as “an iconic brand, with strong adjacency in home and contents insurance, and this points to an environment where platforms like ours can lift the value of trusted brands as they offer different products”.

Banks like ANZ, and mortgage brokers including Aussie Home Loans, have experimented with similar products, but these were not successful.

Angus Gilfillan, CEO of digital mortgage broker Finspo, said the white-labelling market had historically been opportunistic and challenging for providers, although he said the Tic:Toc/Bendigo partnership had improved the offering.

“It has worked for lower value financial products, like credit cards. But with home loans, some customers will want to talk to a person, or go to a mortgage broker, which is why brokers have 70 per cent of the market,” he said.

But Mr Baum said Tic:Toc had created a digital version of the white-labelled product and could distribute home loans at a far lower cost than traditional channels like bank branches or mortgage brokers.

“If you think about what NRMA and Qantas are doing, it is through a highly automated origination platform that changes the economics of fulfilment, and, as a result of that, we enable new distribution channels to be introduced that change the economics of the origination of home loans.”

Qantas Money Home Loans, launched in February, offers borrowers 100,000 Qantas Points each year the loan is held.