Sell with Confidence
Read More
News

Big Four Banks Warned

By Dan Sowden

The Treasurer, Wayne Swan, has raised expectations of an assault on the power of the big four banks in next month’s banking statement, saying he is ”determined to see a new pillar in the system” to take on Westpac, National Australia Bank, the Commonwealth Bank and ANZ.

The so-called fifth pillar would be built around credit unions, building societies and wealth management firms such as AMP and AXA, which are in takeover negotiations at present.

Asked on the Nine Network whether he would approve the AMP bid for AXA Asia Pacific in order to help create the fifth pillar he said he would not speculate but had made it abundantly clear he would ”welcome additional investment in the banking system to provide more competition for the big four”.

Each incurred the wrath of the Treasurer by lifting its mortgage rate 37 to 45 basis points after the Reserve Bank raised the official cash rate just 25 points on Melbourne Cup Day.

”There are better deals down the street,” Mr Swan said yesterday.

”If you go to a credit union you may be able to get up to 100 points better in terms of your mortgage. The big banks behave in an arrogant way because they feel confident their customers won’t walk.”

The Treasurer spoke as the Whitlam Institute published a study that found the big banks ”overcharge their home loan customers”, avoid pressure to reduce costs and funnel the excessive profits to their senior executives.

Prepared by a former Labor staffer, Nicholas Gruen of Lateral Economics, the study claims home loans have become ”commoditised” and simple to provide. ”Normally when a product becomes commoditised, its price falls to eliminate the margin, but the mortgage margin is stuck where it was in 2004, at around 2 percentage points,” Dr Gruen told the Herald.

He wants the government to lend its AAA credit rating to mortgages with a safe loan-to-valuation ratio, enabling non-bank lenders to get access to funds for mortgages on the same terms as the big four. In Canada, where such a system operates, the insurance costs as little as 0.5 per cent of the loan.

Mr Swan confirmed his package would make it easier to switch lenders, saying it would give ”customers the capacity to walk down the street and get a better deal”.

In a submission to the Senate banking inquiry a Melbourne University finance professor, Kevin Davis, proposed allowing borrowers to switch without the discharge of the mortgage and without a new property valuation.

Source: The Sydney Morning Herald

Up to Date

Latest News

  • Million-dollar views!

    3/10-12 Marina Walk, Alexandra Headland Sold for $1,000,000 by Pam Thomas There’s a reason locals refer to Marina Walk at Alexandra Headland as part of the “Golden Triangle”. Positioned at the most elevated point of Alexandra Hill, it offers sweeping ocean views and a prime location close to Mooloolaba Esplanade. … Read more

    Read Full Post

  • Bli Bli home sells under the hammer for $103,000 over reserve

    24 Waterview Crescent, Bli Bli Sold by Jason Mills for $623,000 Achieving a result of more than $100,000 over the reserve price on this Bli Bli property at 24 Waterview Crescent came as no surprise to agent Jason Mills. “The uniqueness was it’s easy access to the water,” says Jason. … Read more

    Read Full Post