Aussies deserve a better deal on personal loans

Bank funding costs continue to plummet but personal loan rates remain sky-high, according to peer-to-peer lender RateSetter. While the banks have passed on at least some portion of recent rate cuts to the property markets, Australians seeking affordable personal loans aren’t as lucky. 

The 90-day bill rate has consistently contracted in recent months. Yet the distance between a bank’s short-term cost of funding and the personal loans they are providing to consumers remains uncomfortably wide1

The Reserve Bank of Australia (RBA) was unequivocal in its June Statement of Monetary Policy finding bank funding costs have declined further, with money-market spreads having fully reversed the 2018 increases. In May, the RBA was clear that long-term debt funding is sitting at record lows. 

Despite increasingly lower costs of funding, bank personal loan offerings to consumers remain punishing, with rates typically well into double digits. 

Personal Loan Rates, Fees & Charges
Interest Rate15.99%13.90%12.69%16.49%
Comparison Rate*16.84%14.77%13.56%N/A

Variable-rate personal loan rates offered by the Big 4 as at 13 June 2019 

Creditworthy consumers deserve better than the raw deal being served up by traditional banks, and RateSetter’s innovative model has shown itself to be an appealing alternative. Peer-to-peer lenders, such as RateSetter, cut out traditional intermediaries, offering customers better value than traditional lenders with lower, personalised rates. 

RateSetter offers low rate personal loans from 6.89% (with a comparison rate of 8.9%) powered by Australia’s largest base of registered retail investors: 15,000 and climbing. Interest rates in that ballpark from traditional lenders usually require a consumer to provide security over existing assets or are genuinely inaccessible to most consumers due to overly stringent criteria. 

With access to a diversified funding base, RateSetter’s unsecured personal loan rates remain steady during economic and market volatility and avoid the barriers other financial institutions put in the way of consumers obtaining personal loans. In April, the value of aggregate loans funded through the RateSetter lending platform surpassed $500 million, reflecting 70 per cent annual growth in loans. 

RateSetter CEO Daniel Foggo said, “Our outstanding growth signals the changing mindset of Australians. Consumers are looking for better and fairer access to consumer finance and they don’t have to look far.” 

“Innovative FinTech solutions like RateSetter show that consumers can access the finance they need to improve their lives without the sting of undue interest rates.”

1 RateSetter analysis, based on Monetary Policy Changes (A2) and Indicator Lending Rates (F5) datasets published by the RBA at