The federal government’s deposit guarantee has helped the big four banks take an even greater share of the mortgage market but borrowers will return to non bank lenders because they offer a better deal, says mortgage broker Resi Home Loans.

Resi’s head of consumer advocacy Lisa Montgomery said borrowers increasingly felt disenfranchised by the pricing power of the major banks.

All the majors - with the exception of National Australia Bank (NAB) - jacked up their variable mortgage rates by much more than last week’s official increase in the cash rate by the central bank.

“The decision last week by three of the big four banks to lift their mortgage rate above the Reserve Bank of Australia’s (RBA) target interest rate disenfranchised borrowers, Ms Montgomery said.

“I think that it’s a bit of an awakening time for borrowers at the moment.
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Australia’s major banks are reviewing their charges on overdrawn accounts in a bid to stay competitive after National Australia Bank (NAB) abolished its fee.

NAB will axe its $30 overdrawn charge from all of its personal savings accounts and personal transaction accounts from October 1.

The move is also aimed at appeasing customers, with NAB receiving more complaints about the fees than anything else.

An overdrawn fee is paid when withdrawals from a bank account exceed the available balance, giving the account a negative balance.
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photo credit: bb_mattToday’s guest post comes from an anonymous senior industry executive (so anonymous, not even we know the true identity!).  Due to the controversial views expressed in this guest post, we will be heavily moderating comments, so please do remember our comment rules!  Enjoy.

Brokers are threatened by big bank dominance, however should they band together they’ll be in a stronger position to secure the longevity of the industry, writes a senior industry commentator.

With the market in such a state of flux it’s tough to call what next month will bring, let alone six to twelve months in to the future. Nevertheless I think you can draw some pretty firm conclusions on the future shape of our industry based on well founded assumptions about past behaviors.

Let me put my comments into context.  I have worked for major banks, non-bank lenders and mortgage managers over many years and I am still heavily involved in the mortgage and mortgage broking industry.

I’ve been on the asset and liability committees of major lenders where they debate mortgage pricing, margins and profitability.
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Banks would lose their cover under the commonwealth-backed guarantee of deposits if they made unaccountable decisions on interest rates, a private senator’s bill proposes.

Family First senator Steve Fielding introduced legislation to the upper house on Thursday aimed at tightening controls on home loan interest rates.

Leading banks would need the treasurer’s approval if they wanted to withhold a rate cut or increase rates beyond Reserve Bank adjustments.

Should a bank’s reasoning not sway the treasurer and the bank insist on moving interest rates, it would lose access to the deposit guarantee scheme.
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Rental accommodation in outer and inner Sydney suburbs continues to plummet, prompting renewed calls for banks to pass on the latest cut in official interest rates.

The Real Estate Institute of NSW says the percentage of available properties for rent in suburbs more than 25 kilometres from Sydney’s CBD fell from 1.1 per cent in February to 0.9 per cent in March - the lowest result recorded since June 2008.

Overall Sydney rental vacancies fell by 0.1 per cent to 1.2 per cent, the lowest recorded since October last year.
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Small businesses have complained banks aren’t lending enough and that the price is too high, while banks say they are lending more than ever before at fair price, Small Business Minister Craig Emerson says.

Mr Emerson has convened a roundtable to discuss small business access to credit during the global financial crisis, to be held in Melbourne on Friday.

Mr Emerson said small businesses complained that there wasn’t enough money available from banks and the cost of available finance was too high.
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Four Australian banks have pledge more than $3 million to help victims of Victoria’s bushfires.

The National Australia Bank (NAB), Commonwealth Bank of Australia (CBA) and ANZ have stumped up $1 million each in funds or donations, while Bendigo and Adelaide Bank, through its Community Enterprise Foundation, launched a Bushfire Appeal with an immediate $100,000 donation.

NAB was the first of the majors to establish a relief fund of $1 million for bushfire victims.
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He is viewed as a rebel among his peers but Steve Keen, Associate Professor in economics and finance at the University of Western Sydney claims that his economic forecasting has an accuracy rating of 100%.

Continuing to turn economic arguments on their head Keen told Lending Central that the Government’s $42 billion stimulus package won’t work, that Rudd should sack all his economic advisers, that the Whitlam Government’s poor economic record has been skewed because it was a “victim of circumstance” and that socialising banks and linking borrowing on housing to rental income is the way to financial recovery.

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Federal Treasurer Wayne Swan has stopped short of demanding banks immediately pass on fully to their customers an expected interest rate cut on Tuesday.

The Reserve Bank is tipped to reduce its official cash rate by at least one percentage point to 3.25 per cent, the lowest rate in 45 years.

Mr Swan was cautious when asked whether the banks should pass on the cut in full, saying these were difficult economic times.
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Taxpayers deserve a “quid pro quo” in the form of fee relief from banks after they have benefited from federal government guarantees, Senator Nick Xenophon says.

The Finance Sector Union (FSU) has called on the government to establish a set of “stimulus protocols” forcing banks to pass on interest rate cuts, maintain staff levels, cap executive pay and to adopt responsible lending.

Senator Xenophon has also called on banks to give taxpayers’ money back to their customers.
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The federal government had to choose between doing nothing to save jobs or joining the big banks in a $4 billion partnership to prop up the commercial property sector, Prime Minister Kevin Rudd says.

Mr Rudd confirmed the government would join the four major Australian banks to set up a $4 billion Australian Business Investment Partnership.

The banks will provide $2 billion and the federal government another $2 billion to provide financial support for major commercial property projects including shopping centres, office towers and factories.
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Credit unions and building societies are set to snatch customers from mid-tier banks as they fight a retail deposit war with the big banks and battle rising costs in 2009, says global consulting firm KPMG.

A survey of Australia’s 10 major building societies and 65 credit unions for the year ended June 30, 2008 revealed the potential for the sector to sweep up customers of second-tier financial institutions if they can provide the full suite of services these customers are accustomed to.
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Commonwealth Bank of Australia Ltd (CBA) today confirmed it has a debt exposure to childcare operator ABC Learning Centres Ltd of around $240 million, taking the total confirmed exposure of the major banks to an estimated $762 million.

Toy wholesaler Funtastic Ltd also said today its earnings could be adversely affected by ABC going into voluntary administration and receivership.

CBA today said its senior debt exposure to ABC, which was placed in receivership and administration yesterday, was around $240 million.
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The federal government has called on all banks to pass on as much as they can out of next week’s expected interest rate cut.

The Reserve Bank of Australia (RBA) is tipped to announce an official cut of 50 basis points, or half a percentage point, on Tuesday.

“Our position is clear: the banks should pass on as much as they can of any increase at any time,” Assistant Treasurer Chris Bowen told Network Ten.
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A price war in Australia’s mortgage market is underway with National Australia Bank (NAB) today following ANZ Banking Group (ANZ) and Aussie Home Loans in reducing its interest rates on home loans.

NAB announced it was dropping the interest rate on its standard variable home loan by 20 basis points to 8.36 per cent.

The 0.2 per cent cut will also apply to business loans, and some rates on fixed mortgages will be reduced by 0.3 per cent, the bank said in a statement.
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