CBA launches direct-only digital mortgage

The Commonwealth Bank of Australia (CBA) has launched its new digital mortgage division, Unloan, offering consumers home loans with a discount that increases every year for up to 30 years.

Unloan, part of its venture-scaling entity x15ventures, has been launched to offer digital mortgages direct to consumers via digital channels. According to the bank, the digital customer experience enables applications to be completed in as little as 10 minutes.

As of 17 May, Unloan is accepting applications for borrowers wishing to refinance home loans up to $3 million and up to 80 per cent of the property’s value.

It offers owner-occupiers a variable rate of 2.14 per cent p.a. (2.06 per cent p.a. comparison rate), including a loyalty discount that grows by 0.01 per cent p.a. every year. This discount is applied for up to 30 years. 

For investors, Unloan has a variable rate of 2.44 per cent p.a. (2.34 per cent p.a. comparison rate) and the same 0.01 per cent loyalty discount every year.

CBA said it expects to expand into new home loans, and turn on open banking-powered assessments in the coming months.

Daniel Oertli, the chief executive of Unloan, said: “We believe home loans should be simple to understand, easy to get, and easier to live with.

“That’s why we built Unloan – a new kind of home loan designed to pass more value back to customers. We have a low variable rate, an ever-increasing discount, and an easy online application.”

Matt Comyn, the CEO of CBA, added: “Driving digital innovation for our customers – including the delivery of distinct and differentiated customer experiences – is core to CBA’s ongoing strategy. 

“Unloan is a powerful example of what can be achieved by successfully bringing together the pace and innovation of the startup world with the scale and assets of Australia’s leading bank, which has always been central to our approach with x15. We are excited to see how Unloan makes a difference for new customers.”

The major noted that it has developed new cloud-based capabilities to provide lending and payments services to Unloan, and will also provide downstream compliance and operations services. 

CBA said it expects to utilise these capabilities in other parts of its business “over time”.

When asked by Mortgage Business about the new product and its distribution last year, CBA’s group executive of retail banking services, Angus Sullivan, stated: “This passage towards digitisation and the incredible shift that we’re seeing in the way that customers interact with us provides part of the opportunity for Unloan.

“At the heart of what we’re trying to achieve with it is a dramatically new technology and processing infrastructure that allows us to approve a customer for a home loan in amazingly rapid turnaround times; targeting that 10-minute space.

“And, if you want to put great value in the hands of the customer, it’s incredibly important to have a low-cost distribution. One of the huge advantages that comes out of a digital model is that it is a low-cost distribution channel and that means you can put great value in the hands of the customer and you can also create great direct-to-customer digital experiences.

“So, we will be focused on digital direct distribution to start with. It will have some connectivity through to CommBank, but we’re very very excited about what’s being built in that space.”

The Unloan comes after AMP Bank also revealed that it would soon offer a digital mortgage solution.

The bank will be leveraging the technology of fintech platform Nano, which already has a digital mortgage under its own brand, but it will be funded and offered by AMP Bank. 

The product is expected to launch in Q3 2022 for new retail, direct-to-bank customers initially through an invitation-only release.

This will then be followed by a wider launch to the Australian market.

At this stage, the digital mortgage is expected to be offered to Australian retail customers only, but the bank has said it will harness the learnings and technological advancements to help drive faster “time to yes” across all scenarios and all channels.

[Related: CBA’s new digital mortgage to be offered direct]