Non-bank lender Nano will launch today with a promise to approve home loans charging a rock bottom 1.99 per cent in less time than it takes to order an Uber.
Nano CEO Andrew Walker claims the approvals process is the fastest in the world.
Founder and chief executive Andrew Walker described Nano as the first lender to offer an end-to-end digital experience and is aiming to write a billion dollars of home loans over the next 12 months.
“We are not putting digital lipstick on top of broken processes,” Mr Walker said. “We are a fully digital mortgage company.”
Nano will begin by allowing mortgage holders with a loan-to-valuation ratio of 75 per cent or less to refinance with them before opening to new borrowers in the last quarter of this year.
They will offer standard variable rates for the four key owner-occupier and investor categories in principal and interest and interest only starting at 1.99 per cent. Nano will also limit the offering to PAYG customers to begin with.
Founded by ex-Westpac executives Andrew Walker and Chris Lumby, Nano was established with the belief it could leverage technology to solve pain points in the approval process that has blown out to more than a month with some lenders.
To speed it up, Nano’s systems conduct an analysis of a property’s value, the borrower’s credit history and loan serviceability and perform an ID check simultaneously.
No ‘loyalty tax’
The process – from beginning the application to unconditional approval – is designed to take about 10 minutes. Last month an approval was granted in nine minutes and 41 seconds.
“It is actually the world’s fastest process by quite some delta,” Mr Walker said.
Nano says the system has a significant edge over rivals in the market which are themselves only a few years old, leaving it poised to battle with both traditional banks and established fintechs.
Like Athena, Nano promises just one interest rate per product. The focus on approval speed sees it square up against Bendigo & Adelaide Bank-backed Tic:Toc. The sophistication of the platform pits it against the NAB-acquired 86 400.
Nano’s Mr Walker says many home loan offerings that purport to employ the latest technology are just a digital front end with a credit specialist observing the process. In some cases banks have simply outsourced the grunt work to customers.
“They take your information digitally, they give you a portal to upload your documents and then an underwriter sits in the bank,” Mr Walker said.
“Generally the times are rapid compared to the rest of the industry, like a few days instead of a week. But it’s not a digital process, it’s a digital information capture really and that’s the difference.”
Without the overheads of a branch network and legacy systems acquired over decades, Nano says it can save a borrower $75,000 over the life of a loan with about $12,000 in savings from fees and charges alone.
Nano says it will feed the savings directly into prices. It will never charge customers different prices for the same product – the dreaded “loyalty tax” – and will use this proposition to carve out a meaningful slice of Australia’s $400 billion home loan market.
Mr Walker forecasts that about $100 billion in Australian mortgages will be sold digitally over the next three to five years. He cites the experience of US player Rocket which has captured about 9 per cent of the market with its digital approvals process over the past decade.
Nano has approved $30 million in loans during its soft launch with the first loans funded from its own balance sheet. It acquired $33 million in funding from a New Zealand investor in 2020 and will tap wholesale markets to fund future loans.
Originally published by James Frost, 30 June, 2021, https://www.afr.com/companies/financial-services/nano-launches-dirt-cheap-loans-available-in-less-than-10-minutes-20210629-p58554
Variable rates are subject to change, but were correct as at 30 June, 21.