Big four banks lose customers

Borrowers are voting with their feet and taking their business elsewhere. Figures from the Bureau of Statistics show that 35 per cent of all home loans taken out in 2011-12 were for refinancing and that the smaller banks won 24 per cent of the growth in home loans.

Borrowers are voting with their feet and taking their business elsewhere. Figures from the Bureau of Statistics show that 35 per cent of all home loans taken out in 2011-12 were for refinancing and that the smaller banks won 24 per cent of the growth in home loans.

New lending actually fell in 2011-12, but the amount of money borrowed increased by eight per cent, confirming further the trend in refinancing.

The removal of exit fees is being credited with the push from borrowers to seek alternative lenders and secure themselves a better deal. A spokesman for Treasurer Wayne Swan said that the figures show the Government’s banking reforms are working by stirring competition and assisting customers to make the switch.

“People are taking advantage of our ban on mortgage exit fees,” he said. “This has put more power in the hands of Australian families: they can walk down the street to another lender if their current bank isn’t looking after them."

Read more at TheAge.com.au 

What about the savers

Well done to the Government for making it easier to switch banks and giving borrowers genuine choice when it comes to taking on a mortgage, or refinancing loans.  The new banking reforms have helped people take advantage of falling interest rates and shown the big banks that customers are no longer the cash cow they once were. Unless of course you are a saver rather than a borrower.

The lowering of the cash rate over the last year has hit those with savings accounts hard. Living on a fixed income is difficult enough without that income being gradually eradicated. The banks have always been quick to raise interest rates on borrowing when the Reserve Bank of Australia (RBA) raises the cash rate, but not so quick to respond when lowered. But it seems that those who are relying on the interest paid on savings accounts are treated even more shabbily. Not only are the banks slow to increase the interest rates and quick to reduce them on saving accounts, it seems they are also looking for new ways to reduce the interest paid altogether.

Two weeks ago we answered a question from Ian who holds a deeming account with the Commonwealth Bank of Australia (CBA). Not only have the deeming rates applied by the Government changed, but the CBA has also chosen to change the way in which interest earned is paid. Rather than paying the higher rate of interest on all the money in deeming accounts, it will now only pay this rate to the amount above the high-interest threshold. This will potentially cost Ian and customers in similar positions thousands of dollars each year – thousands of dollars that many can’t afford to lose.

So what has the Government done for savers? Nothing.  Sure, you can switch banks and look for a better deal, but there are few financial institutions which are paying a decent rate of interest on savings, they simply don’t have to. On the other hand, if you are borrowing money, the banks can’t give it to you quickly enough. With refinancing in the year 2011-12 accounting for 35 per cent of all new loans and, the amount borrowed increasing by eight per cent, it seems we are, more than ever, a nation happy to live on credit. In a period of falling house prices, surely this can’t be good?

Is this really the message we want to pass on to the next generation? That working hard and saving your money is a waste of time. That it’s better to borrow as much as you can and simply change banks every few years to get a better deal. Somewhere along the way I think our priorities have become a little skewed. As the saying goes, neither a borrower nor a lender be!

Has Debbie got it right? Or does it make more sense to borrow on the never-never rather than save all your working life?





    COMMENTS

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    hhnash47
    13th Aug 2012
    1:30pm
    THE REAL ANSEAR IS , TO ALL THAT HAVE MONEY TO INVEST ,YOU HAVE TO CHERRY PICK !!!! CAUSE IF YOU DONT THE BANKS WILL !!!!!
    Multidisab
    13th Aug 2012
    2:14pm
    the figures show the Government’s banking reforms are working by stirring competition and assisting customers to make the switch. (see article above)

    i believe in Labor government doing everything it can to help those who need it, and that's all there is to it. As a person living as sole financial support on the pension, I need to manage any finds better and better until a relae will come sometime in the future. Until then I am learning that to be more frugal is a happy experience instead of thinking of loss.
    Pardelope
    13th Aug 2012
    2:34pm
    Another thing I don't like is how banks raise the point at which they commence paying interest (a low one) without advising of any alternatives. Accounts which once earned something on amounts between zero and $5,000 or zero and $10,000 (for example) - now pay nothing until your balance is as high as (in one case) $40,000. Few pensioners would have a savings or cheque account with such a large balance.

    This forces you to search for a better account or bank and then go through the rigmarole of advising all the organizations who are linked to the account e.g. for your pension or direct debits - and get new cheque books, debit cards etc. Grrr!
    ourjeffie
    13th Aug 2012
    2:54pm
    I had been with one of the big four banks for close to 40 years until I changed recently to one of the smaller banks. When I was asked by the old bank why I was closing my accounts after so long I summed it up by saying "you are not customer focused". On my second visit to my new bank I was greeted by name, the first time that had happened to me in a bank for close to 40 years!
    hhnash47
    13th Aug 2012
    3:03pm
    GOOD ON YER OURJEFFE IF WE ALL COULD TAKE A HINT FROM YOU MAYBE THEY WILL WAKE UP AND DO SOMETHING ABOUT ALL THE CUSTOMERS THERE LOOSING , ME INCLUDED ,
    Pastor
    13th Aug 2012
    4:31pm
    Try Credit Union of Australia (CUA). I have been with them for many years, and am very satisfied.
    normie 39
    13th Aug 2012
    5:55pm
    Totally agree Pastor, I have also been a customer for nineteen years and can't speak highly enough of their expertise and customer service.

    Normie 39
    Boof
    13th Aug 2012
    5:32pm
    A few years ago, in the 80's. A mate took out a loan from one of the Big Four Banks. He bought a house for $150,000.00.over 20 years. He went to our Credit Union ( Maritime Credit Unioun) at the time. They transferred the loan, paid an exit fee, and saved my mate "Tinka McGuiness", $80,000.00 in the process. No exit or other fees involved.
    If the Government would give Credit Uniouns the same status as banks, they could even make loans cheaper, but they won't do it. As everyone knows, that the Australian Governments are run by the Banks and High Finance Corporates.
    RichF
    13th Aug 2012
    7:55pm
    Yep.

    We haven't used banks for close on thirty years now.

    We have been with various Credit Unions depending on where we were living Right now that means Wide Bay Australia in Queensland. Great service, decent interest - not huge but far better than ANY bank and happy smiling faces.
    Robberto
    2nd Sep 2015
    6:25pm
    I believe it to be very true. Not so recently I have visited barclays bank liverpool and I have to tell you there were very few customers there. I would actually say a part of it is due to the banks still being very rude towards people.
    RichF
    3rd Sep 2015
    8:20pm
    Speaking for myself, I haven't used a ''bank'' for about 30 years or so. When we (the other half and myself) moved to Qld in 2000, we started off with a credit union but found that travelling from Nambour to Maroochydore and back every other day or possibly as little as twice a week was stil too expensive; so we transferred to a building society. Over the years this transmogrified into a sort of, kind of facility to do al sorts of things associated with banks and finally, in April thi year it became a fully fledged b-a-n-k. As far as we are concerned, nothing has changed. We still have access to our accounts at NO cost, we have noe monthly charges imposed at all and we are stil receiving the same cheerful, polite and happy service as we have aways had. The only difference is that th institution now has better access to funds -- much better than it could as a ''mere'' building society.

    A real win -- win and possibly another win situation.

    RF
    RichF
    3rd Sep 2015
    8:20pm
    Speaking for myself, I haven't used a ''bank'' for about 30 years or so. When we (the other half and myself) moved to Qld in 2000, we started off with a credit union but found that travelling from Nambour to Maroochydore and back every other day or possibly as little as twice a week was stil too expensive; so we transferred to a building society. Over the years this transmogrified into a sort of, kind of facility to do al sorts of things associated with banks and finally, in April thi year it became a fully fledged b-a-n-k. As far as we are concerned, nothing has changed. We still have access to our accounts at NO cost, we have noe monthly charges imposed at all and we are stil receiving the same cheerful, polite and happy service as we have aways had. The only difference is that th institution now has better access to funds -- much better than it could as a ''mere'' building society.

    A real win -- win and possibly another win situation.

    RF


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