businessOwned by: ASX Listed
monetization_onFunded by: Retail deposits and wholesale capital markets
securityLMI Provider: Genworth
account_balanceLender type: Bank
Macquarie was dubbed by the media as the Millionaires Factory for its sky-high bonuses paid to staff and even higher profits. Macquarie was the bank that funded Aussie Home Loans in the late 90s, bringing competition to the major banks and forcing them to lower their interest rates.
Macquarie Mortgages has a somewhat checkered reputation as during the GFC they pulled out of the market completely leaving many customers on higher interest rates, particularly those with low doc loans.
How do Macquarie Bank’s home loans compare?
They’re great at
- Very competitive variable rates, most of the time
- Customer service
- Refinancing a home loan
- Investors with large deposits
- Offering lower interest rates if you have a large deposit
- Working with mortgage brokers, although some brokers still hold a grudge
- Working as a wholesale funder for mortgage managers
- Fast loan approvals
- Macquarie’s Line Of Credit allows 10 sub-accounts and a global limit
- Alternative income verification accepted for self-employed borrowers such as BAS combined with financial statements
- SMSF loans (high legal fees apply)
- Reasonable approach to exit strategies for people over 50 years old
- Assessing loans with a large deposit using common sense instead of credit scoring
- You can use the Westpac / St George ATM network without paying fees
- Guarantor loans for first home buyers
- Upfront bank valuations available
But they’ve got some drawbacks…
- Their fixed rate loans are often more expensive than other lenders
- Lending policy is very conservative above 80% of the property value due to their LMI provider.
- Interest rates and fees are not always competitive if you have a small deposit
- LMI premiums can be expensive
- They’re unlikely to help people with a bad credit history
- No branch access
- Borrowing over 90% of the property value is tough
- Depending on how busy they are, they may be slow to assess your application
Coronavirus / COVID-19: Macquarie Bank policy changes
Macquarie Bank has announced that for home loan applications with a loan to value ratio (LVR) of less than or equal to 70%, their credit policy remains the same.
For applications, where the LVR is greater than 70%, the following applies:
- Home loans involving debt consolidation, equity release or cash out are no longer permitted;
- Maximum debt to income ratio of 6 times; and
- Additional income and employment verification requirements apply to all applications, not just for those in impacted industries.
Currently, public transportation and delivery services, hospitality, retail, sport, arts and recreation are industries identified as most affected by Macquarie.
- For PAYG borrowers they require either salary credit or they will conduct employment verification.
- For self-employed borrowers regardless of industry they require March quarter BAS.
These changes will be effective from Thursday 16 April 2020.
Coronavirus / COVID-19: Macquarie Bank mortgage relief
All Macquarie home loan customers who are experiencing financial difficulties due to the novel coronavirus pandemic can defer their mortgage repayments for six months.
This also applies to commercial loans, overdrafts, car loans and credit card cutomers.
Please note that interest continues to accrue on your home loan, and is added (capitalised) on to your home loan balance. Your home loan balance will have increased at the end of your repayment holiday.
Also, no additional lending (i.e. home loans, credit cards etc.) will be approved for customers on a repayment pause.
What home loans types do they have?
Macquarie has a simple product range that cuts the confusion when choosing a home loan:
- Their Basic Home Loan is a no frills, low fees, low rate home loan suitable for investors or small loan sizes
- Their Offset Home Loan Package is comparable to the major bank’s professional packages and has an annual fee, but in return you get a lower interest rate and fee free credit card.
- Their Line Of Credit Home Loan is superior than the LOCs offered by most major banks. It has a global limit which means if you have a $500,000 home loan with 5 x $100,000 sub accounts then you can go over the limit on one account as long as you stay under the overall $500,000 limit. It’s been a popular choice with investors as you can let interest capitalise as long as you stay under the limit.
These three variable rate loans have the same interest rate in most cases. For larger loan sizes, we’ve been able to negotiate better rates on their Offset Home Loan which is their most popular loan.
Their fixed rate loans tend to be more expensive, and I’d recommend you consider other fixed rate offers.
Macquarie also has an SMSF Loan, which at times is very competitive, and a Reverse Mortgage and Accommodation Bond Loan product.
Negotiating a better interest rate
It is possible to negotiate a better interest rate with Macquarie, but usually only for larger loan sizes or when they are losing customers to other lenders.
Your mortgage broker can put in a pricing request with their Macquarie relationship manager and they’ll make you an offer. Macquarie tends to have a preference for owner occupied loans used with a large deposit and principal and interest repayments.
Would you like us to put in a pricing request for you? Call us on 1300 889 743 or complete our free assessment form online.
Innovation and the digital mortgage
Macquarie has always been an innovator in the mortgage market. Firstly with funding Aussie Home Loans using securitisation, then with low doc loans and now with the digital mortgage.
The idea of the digital mortgage is that you can get rid of most of the paperwork and instead apply for, get approved and have your contract accepted all electronically. They’ve worked hard and invested a fortune to make this a reality but only time will tell if it delivers the great customer experience that it promises.
Secret bonuses and insane work hours…
Macquarie Mortgage staff often work long hours to approve and settle the huge volume of home loans they receive. It’s not uncommon for them to work long into the night and on weekends as well.
Instead of being paid overtime, Macquarie’s staff receive a ‘secret bonus’ which is an annual profit share. Apparently, overtime is taken into account with this but it’s hard to be sure and nobody we’ve talked to knows how it’s calculated.
It’s a strange way to motivate a team as many staff feel it’s unfair, and we expect there’s a few receiving huge bonuses that are very tight lipped about it.
Tip for applying with Macquarie Bank
Use Macquarie Bank’s application cover sheet to prepare for your home loan application.
Note: This is the latest submission coover sheet effective July 2017. Please refer to Macquarie Bank for their most up-to-date document requirements.
Macquarie Bank client story: Cassandra, Vic
- Buy out her ex partner.
- Keep her home.
After 30 years of marriage, Cassandra and her husband made the difficult decision to separate.
They decided that Cassandra would keep the family home so she needed to refinance the mortgage in order to buy out her husband.
Because she was almost 60 years old and close to retirement age, most lenders would only approve her for a 15 year loan term.
Unfortunately, based on her income and asset position, she wouldn’t have been able to service, or meet the mortgage repayments, for the loan term so her refinance would be declined.
Macquarie Bank accepted Cassandra’s exit strategy of reducing her loan amount by the 18-year mark and then using her superannuation to pay out the remainder of the home loan.
She also explained that her profession as a teacher would allow her to work several years past retirement age so this also helped her meet serviceability.
Cassandra was able to qualify for a 30-year loan term, pay out her husband and avoid downsizing her property.
Compare Macquarie to other lenders
Not sure which lender is right for you? Our Home Loan Experts can help!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.