Big 4 to Become Big 5 with Macquarie-Yellow Brick Road Deal
By Vittorio Hernandez | November 8, 2012 11:05 AM EST
With the planned inking of the deal between Macquarie Group and Yellow Brick Road, media and Australia's banking community would soon have to get used to referring to the five financial institutions as the Big 5.
The agreement between the Macquarie Group and Yellow Brick Road is expected to lead to more competition in the residential home loan business in Australia, which is controlled 80 per cent by the big four. Under the deal, aggressively priced mortgage products will be offered to consumers through Yellow Brick Road's 130 outlets.
"Plenty of commentators, including politicians, talk about the need for competition. This is a game changer that will take the big four head on," The Sydney Morning Herald quoted Yellow Brick Road Chairman Mark Bouris.
He said the agreement would bring back choices, access and competition similar to the 1990s when he established Wizard Home Loans which he eventually sold to GE Money for $500 million.
Treasurer Wayne Swan has been urging Australian home loan borrowers to take their business to other lenders since the big four has consistently been refusing to pass in full to borrowers overnight cash rate cuts made by the Reserve Bank of Australia the past months.
Reports said the deal will compete with the big four by offering interest rates 1.15 percentage points lower rates on all new home loans for the first year of the loan and another 0.86 percentage point discount for the remaining years of the loan.
In preparation for the agreement, Yellow Brick Road halted trading of company shares on Wednesday morning. As early as Tuesday, speculations about the fifth bank circulated at the Flemington Racecourse where the 2012 Melbourne Cup was held. Reports said talks at the Birdcage of Flemington focused on interest rates and racing tips.
Yellow Brick Road said it would make an announcement before the start of trading on Friday, Nov 9, to address the speculations.
To contact the editor, e-mail:
Join the Conversation
- Apple Inc (AAPL) Stock May Reach $150; First Trillion Company Talks, iPhone 6 and Apple Watch Boost Price
- Travel Alert: New Delta Air Lines Airbuses Could Be Seen In Australia Soon
- Travel Alert: Frequent Flyer Tie-Up Between Virgin Australia, South African Airways Enhanced
- Walmart Canada Feeling The Heat As Grocery War Intensifies
- Amazon Black Friday 2014 Deals Start On Nov. 21, 2014 Including Limited-Time Lightning Deals And Deals Of The Day On Clothes, Toys, Jewelry, Watches, Bags, Accessories And Electronics
- Russia's New Tactical Nuclear Weapons Program Growing Confident Against the US: Talks of World War III
- Apple and Google Engage in Thermonuclear War, New Google Translate Chat App in the Works
- Walmart Offers the Best 2014 Black Friday Deals on iPhone 6, iPad Ai2 & Other Gadgets – Reports
- Update Samsung Galaxy S5 to Android 4.4.4 KitKat, Sprint Release and Installation
- More Nexus 6 Problems Arise with Android 5.0 Lollipop, Poor Benchmark Results and Other Issues
- HTC One M8 Android 5.0 Lollipop Release Delayed: Other Schedule and Installation Guide
- Highest Paid NBA Players 2014: NBA Stars Who Earn More Than LeBron James