Smaller home loan providers return to the market

A range of second-tier lenders are returning to the home loan market as the global financial crisis begins to reside.

Lenders such as Liberty Financial, Credit Union Australia and Homeloans have increased their home loan market activity, signaling a return to greater competition, the Age reported.

Liberty Financial, previously considered to be somewhat of a specialist lender, signed up with Mortgage Choice last month, one of Australia’s biggest mortgage broking networks.

The newspaper said that Liberty is believed to have tightened its credit criteria, focusing on so-called near-prime customers for home and car loans.

Mortgage Choice chief executive Michael Russell confirmed that Liberty has new funds to lend, offering more options for customers who compare home loans in search of the best deal. "In this environment that’s good news for us and that’s good news for home buyers,’’ he added.

Last week, Lisa Montgomery, head of consumer advocacy at Resi Mortgage Corporation, told News Limited that mortgage holders who are worried about defaulting on their repayments should also consider purchasing home loan insurance.

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