Mutuals call majors on banking competition illusion'

Mutuals call majors on banking competition "illusion"

The $83 billion mutual banking sector has taken aim at some of Australias major banks calling for greater disclosure of the ownership of bank sub-brands.

In a letter to the Australian Securities & Investments Commission, CUA chief executive Chris Whitehead has raised concerns around the “illusion of independence and competition” created by bank marketing and advertising campaigns on behalf of their sub-brands, according to News Ltd reports.

CUA considers that the holder of the operative Australian financial services licence should feature prominently in any advertising and not be buried in fine print,” Whitehead reportedly said in the letter.

“Consumers looking for an alternative to the listed banks should be able to be confident that they have found one.”

He has also called for clarification about claims under the governments $250,000 deposit guarantee.

He argued that consumers might overestimate the protection they will get if they have deposits adding up to more than $250,000 spread across various bank sub-brands. The Financial Claims Scheme would treat all of these deposits as belonging to one institution and deny these consumers protection beyond the $250,000 limit.

In a similar statement, bankmecu managing director Damien Walsh said there was “growing concern that the major banks are creating a veneer of competition through their various sub-brands.”

He listed CBAs Bankwest, nabs Ubank and Westpacs St George, Bank of Melbourne, RAMs and BankSA.

ANZ did not hold a stake in any sub-brand (in the deposit or lending market) at the time of writing.

“We have also asked the treasurer to require banks to prominently disclose ownership of their wholly owned subsidiary sub-brands in all advertising,” Walsh allegedly wrote.

At the bottom of their homepages, Bankwest, Ubank, St George, Bank of Melbourne, RAMs and BankSA all state they are a division of the major bank that owns them.

The home loan market is a combination of a wide variety of different types of lenders. Borrowers should start by comparing home loans and spend time researching different lenders to arm themselves with the information required to make an informed decision.

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How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

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Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

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We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.