The early 1990s saw the emergence of lenders such as Aussie Home Loans and Wizard who source their funds from the securitised wholesale market. They did not have the extensive branch structures of the banks and their cost base was much lower. Initially, this enabled them to offer borrowers lower interest rates.

As the banks reduced their costs by rationalising their branch networks and increased their fee income, they could reduce their interest-rate margins. This not only enabled them to provide competitive rates but also allowed them to provide the convenience of other services such as deposit accounts, cheque-clearing facilities, credit cards etc.