GE Money in limbo as CBA cherry-picks Wizard loans, drops rate

483
925

Commonwealth Bank of Australia (CBA) says it will acquire a $2.25 billion portion of Wizard Home Loans’ portfolio from GE Money.

CBA would also pass on a 100 basis point cut to interest rates to those Wizard home loans to be included in the new CBA-funded portfolio, the bank said in a statement on Tuesday.

CBA said the 16,000 Wizard customers affected by the acquisition would pay 5.84 per cent on their variable home mortgage rate from March 9.

However, GE Money spokesman Tristan Everett said customers were already paying 6.26 per cent and the standard variable rate for a Wizard home loan should drop to 5.26 per cent.

Australia’s largest home lender shunned the remaining $9.25 billion Wizard portfolio that includes around 60,000 accounts comprising low-documentation loans and mortgages with high loan to valuation ratios (LVRs) and currently has a default rate of around three per cent.

This default rate is about 2.5 times higher than the default rate on the loan book of the average bank.

GE Money’s Wizard Home Loans subsidiary was sold to John Symond’s Aussie Home Loans and CBA – a 33 per cent shareholder in Aussie – on Christmas Eve.

The sale followed seven months of talks with a number of parties and will be completed on February 27, with Aussie taking the GE Money-owned Wizard brand and franchise network for an undisclosed amount.

CBA retail product chief Michael Cant said the bank reviewed the Wizard loan book in detail after striking an acquisition deal with GE and Aussie on December 24 but decided against buying another $1.75 billion initially canvassed with GE Money.

“We weren’t seeing dramatic signs of credit problems in the portfolio but at the same time we applied a very strict criteria before we accepted it,” Mr Cant told AAP.

CBA has excluded low-documentation loans and fixed rate loans, and taken loans with LVRs of less than 90 per cent, have no past arrears, and that are 100 per cent mortgage insured, he said.

CBA sweetened the deal for Wizard borrowers being transferred to Aussie by passing on the Reserve Bank of Australia’s (RBA) one percentage point interest rate cut.

GE is hoping CBA may pick up more loans from the Wizard portfolio as the local subsidiary of General Electric moves to exit the mortgage market.

“We’re hoping that the DAF (deferred administration fee) waiver window that we’ve introduced on March 1 will go some way to allowing people to make that choice,” Mr Everett said.

“But they (CBA) said up to $4 billion at the start, so there may be ongoing discussions after that.

“The door is open.”

Under the deal with CBA and Aussie, GE Money last week said it would waive the deferred administration fee – the exit fee – for 12 months for those home loan borrowers wishing to refinance their home loans though Aussie.

The fee waiver came as GE said high wholesale funding costs in the US prevented it from passing on the RBA’s recent cuts.

Resi Mortgage Corporation’s head of consumer advocacy Lisa Montgomery says she is encouraging Wizard borrowers to look at other options.

“There should be a choice based on all aspects of the loans, not just interest rates,” she said.

She said the average standard variable rate for the big four banks is 5.82 per cent.

AAP

About the author

483 COMMENTS

  1. Why is every one different interest only rates? i had the the dreaded AMS rate raise letter today through the post the gits….myne is now 8.08%

  2. Yes Class action for sure..Am looking into trying to recoup some money out of AMS or else they can let me off the DAF..

  3. Actually, whats stopping GE Money from just charging, say, 10% interest?
    Who’s gonna stop them?
    At what point does it become excessive to the point where some Authority can intervene?

    Has anyone actually gotten any feedback or advice from any State or National Consumer Protection agency/authority about this?

    Thanks.

  4. There has been lots and lots of complaints to the ACCC and they are all on line at the ACCC to view….The ACCC are keeping a very close eye on these Jerks….We Just have to keep emailing the Accc as i do once per month so its recorded, the more the better..

  5. Plus i copy an paste this site plus others plus mye written complaint to all the current affair and today tonight programs on a regular bases…

  6. Make them work for their money, call/email them every week (or more) and ask for a payout figure, imagine the extra work load if every customer did this and they would eventually have to employ more staff with a zero return.

    Just another idea, don’t want to make it too easy for them.

  7. Hi All,

    I just lodged my 1st complaint with ACCC along these lines, I will not hold my breath waiting for some action.

    “Hi
    I wish to complain about anti competitive behaviour of AMS Mortgages who is owned by GE Money. It is my understanding that GE is trying to exit the Australian Mortgage market and it appears that they are trying to force existing customers to refinance by pushing the variable interest rates up by greater amounts then the RBA Cash Rate increases and not passing on some of the previous RBA rate decreases. When I first took out my mortgage with Wizard in 2006 and for the first 18mths of my mortgage Wizard/AMS/GE Money had an implied convention of increasing and decreasing rates in line with the RBA cash rate movements and this provided me with a certain amount on certainty in my mortgage contract that I relied upon when taking out the mortgage. However since late 2007 the difference between the RBA Cash Rate and my Wizard Variable rate has moved from 1.37% to 3.49% which is not what I expected when I took out my mortgage and I feel the I have been misled by Wizard/GE Money. I understand Wizard/GE Money has the right to move the variable rate up and down in line with changes in the RBA Cash rate but I relied on previous conventions of it staying 1.37% above the Cash Rate. I would like to move to another home loan provider but as part of my loan is fixed (at 6.79%) I cannot do this without incurring thousands of dollars in break fees which a find unbelievable as the fixed portion rate is 1.49% under the under their current variable rate

    Please note the uncompetitive behaviour of GE Money when in Feb 2009 the RBA decreased the Cash Rate by 1% or 100pts none of this rate decrease was passed on to the variable rate.

    If I was told when I signed up for my home loan that Wizard/GE Money was going to move their margin to more than double the existing difference between the Cash Rate and the variable rate I would not signed the mortgage contract and looked for another mortgage provider.

    Date RBA GE Money Diff in
    Rate variable Rate
    21/04/2006 5.50 6.87 1.37
    12/05/2006 5.75 7.12 1.37
    10/08/2006 6.00 7.37 1.37
    21/11/2006 6.25 7.62 1.37
    16/10/2007 6.50 7.87 1.37
    15/11/2007 6.75 8.12 1.37
    21/01/2008 6.75 8.27 1.52
    14/02/2008 7.00 8.52 1.52
    19/03/2008 7.25 8.87 1.62
    16/04/2008 7.25 8.99 1.74
    21/07/2008 7.25 9.14 1.89
    7/09/2008 7.00 8.89 1.89
    16/10/2008 6.00 8.09 2.09
    27/11/2008 5.25 7.34 2.09
    30/12/2008 4.25 6.44 2.19
    4/02/2009 3.25 6.44 3.19
    21/04/2009 3.00 6.34 3.34
    14/10/2009 3.25 6.59 3.34
    11/11/2009 3.50 6.84 3.34
    9/12/2009 3.75 7.24 3.49
    10/03/2010 4.00 7.49 3.49
    14/04/2010 4.25 7.74 3.49
    11/05/2010 4.50 7.99 3.49
    3/11/2010 4.75 8.24 3.49”

  8. Nice work M8, thats great, i will also do my month complaint but with more deatail like this….Keeping hitting the ACCC and media….Lets get these GITS>.

  9. The last time I complained to the ACC I asked why wont they help GE money customer and ex Wizard customers I was told to write Jullia Guillard maybe she is our last hope if everyone starts annoying her

  10. Hi Mario no there not interested in helping us either.

    Its all too hard for anyone to care

    I copied and pasted this page to ACCC again hopefully they will get new staff one day who gives a damn whats happening

  11. ACCC is the only way forward…..dont give up people as long as we all keep emailing ACCC and media, and i mean email to current affair etc, we will get some where….GE will be made accountable if its the last thing i do…

  12. Thanks Lisa.
    I am waiting on a letter from GE Money to explain themselves. I wrote to the Financial Ombudsman instead of the Credit Ombudsman which GE told me have the jurisdiction in this case.

    Well if I get nowhere with the Credit Ombudsman, then I will consider bringing an action against them for not doing their jobs and allowing GE to continue their corrupt practices. Otherwise, whats the point in having a Credit Ombudsman? Scrap them.

  13. Scrap that last thought. Credit Ombudsman cant do much. Checked their website:

    “We are not government-funded nor do we regulate the financial services industry or discipline our members.”

    Well ACCC and then onto local MP or Minister. Someone has to do something.

  14. There is nothing – no one cares we need to pray GE sell it off to one of the big four banks and then we maybe ok at least we will then be able to fix at a reasonable rate???

  15. Happy xmas and new year GE – AMS what ever bloody name you go by.. Thanks for everything over the last year. Hope you managers can sit down on xmas day and feast on your big xmas meal and enjoy all your prezy’s. Our xmas is a disaster after been out off pocket nearly 8k to feed your greedy ass bellys…….FFFFFFFFFFFFFFFFFFFFFFFFFF youuuuuuuuuuuuuuuuuu!!!!!!

    oh and by the make sure you dont joke on a Turkey Bone hey!!!!

  16. Dear Fellow Brokers
    isn’t it a sad day when what was to be the saviour to home loans the great GE ended up being the company that absolutely screwed honest hard working Aussies. But I have good news please read the following carefully – list on here in point form what has happened
    Write it in point bullet form – you can send it off to the federal pollies ( yes they do act I have wrote to them about the licensing and they do respond).
    http://www.aph.gov.au/whoswho/index.htm
    Write to them , get your clients to write to them help them put the letter together , send them to all the news editors of the major newspapers and TV and Radio Stations. Then watch the magic begin. Forget writing to the PM only , go to the backbenchers and to the independents and they will do something. Post it on here and I will be happy to write also. Our industry is going to get a serious shake this 2011 and no CEO or Banker is going to get away with what they are doing.

  17. I have now paid these gits out and am totally free from these twats…..hope you can all soon get shot of them also….I bid you all good day for now…Thanks for ripping me off GE/AMS for the last few years, hope you managers fall ill and die…….

  18. Hi Everyone

    Just wish to get a snapshot of where everyone is at with their interest rates please. I assume everyone is on a variable rate?

    Mine is currently 9.32%. Needless to say, I cannot sustain this anymore.

    Could everyone please state their current rates.
    Thanks

  19. I was on 8.6% 3 months ago, am now free from these idiots, they are blood sucking gits….I feel so much better now i have F them off….I am back to renting again though….Oh well better than been angry and taking it out on my family…..GOD i HATED THEM SO MUCH..

  20. Well done, mad dog. I have to sell now (wish I did it ages ago in a better market – but I misplaced the crystal ball) so hopefully will be rid of them soon.

    Best of luck to you, me and everyone else who’s been through this.
    Surely we are all now due for good luck after this horror.

  21. Financial stress is the biggest killer in Australia – have experienced it and not a pleasant time – Governments should NOT allow owners of financial institutions to ‘sell-off’ and leave mortgage holders stressed to the max !! ALL legal in Australia, not one response from the Politicians !!

  22. Agreed, Carlo.
    What amazes me, is that a company like GE, who claim that they dont rely on local deposits like australian banks and didnt receive any govt assistance, still align themselves with RBA increases.

    And, if a company isnt doing too well, they shouldnt continually be passing on its losses to its customers, there needs to be an element of “suck it up”. Companies and individuals suffer losses, but companies try to pass on losses to customers to maintain their profit margins.
    Your customers are there for reasonable business, not to help you recoup your losses from.

    Its all ridiculous. Legal extorsion.

  23. Loyal Wizard Customers dudded by a very clever Businessman – Mr Bouris doesn’t really care about Loyalty…. help me get out of Stress !!

  24. Hip Hip Hooray!!! I finally got out of GE Money after 3 years of paying a higher interest rate.I have managed to refinance to Uhomeloan. Also did anyone heard that Pepper Homeloans bought GE Money recently and hopefully things will be better for those suffering from mortgage stress due to the higher interest all of us are paying due to Mr. Bouris broken promise.

  25. Yeh man really feel for you guys, i ended up selling my house and went back renting….I brought my house top of the boom in Jan 2007 and sold it 4 years later at the same price…So in 4 years i made nothing, paid megga mortgage repayments as apose to renting and had the hassle of GE….All the above is a pisstake. so glad just to be shot of them, thats the only way i can look at it.. Peace!!

  26. GE Money should not be in the home loan market & their trading should cease in Australia due to the stress they place upon ex-Wizard customers. Also, Mark Bouris should be held accountable for all the Customers he dumped in their time of need

LEAVE A REPLY

Please enter your comment!
Please enter your name here