The ANZ Bank, Commonwealth Bank and ING Direct have been named as finalists for the Mortgage and Finance Association of Australia’s (MFAA) prestigious Lender of the Year Award, in the 2010 MFAA Excellence Awards.

The annual Award - to be announced at the MFAA Excellence Award’s night-of-nights on 12 March - is one of the industry’s most sought after honours.

To reflect the importance the MFAA places on monitoring lenders’ service performance in relation to the broker channel, MFAA accredited members were invited to vote online for the Lender of the Year in January 2010.

To ensure this is simply not a ‘popularity vote’, each lender was ranked against a set of seven criteria by all eligible voters. The top three scoring lenders became the finalists, and the overall top scoring Lender, the winner, will be announced at the Excellence Awards Dinner at the Westin in Sydney on Friday 12 March 2010.
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National Bank of Australia Ltd (NAB) has raised its variable mortgage rate by the same amount as the central bank, as it attempts to lure customers away from rivals and particularly Westpac Banking Corporation.

NAB said in a statement on Thursday that it would increase its standard variable home loan rate by 25 basis points, to 6.49 per cent, effective from Friday December 4.

By constrast, Westpac on Tuesday raised its variable home loan rate by 45 basis points to 6.76 per cent, effective from Friday December 4. The increase was almost double the increase in the cash rate announced earlier that day by the Reserve Bank of Australia (RBA).

The RBA increased the cash rate by 25 basis points to 3.75 per cent, its first ever third consecutive monthly increase since it began announcing rate increases in 1990.
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Australia’s big four banks, which control about 85 per cent of the mortgage market, have wasted no time in matching the central bank’s interest rate rise with 25 basis point increases to variable home loan rates.

ANZ Banking Group Ltd was first off the mark after the Reserve Bank of Australia’s (RBA) announcement, saying in a statement on Tuesday that its standard variable home loan rate will rise to 6.31 per cent as of Monday November 9.

The Melbourne-based bank will also raise interest rates on a range of deposit products by 35 basis points and rates for credit cards and business lending will increase by 0.25 of a percentage point.

“Funding costs remain high and despite improvements in credit markets the average cost of wholesale funding is increasing which is continuing to place considerable pressure on mortgage margins,” ANZ chief executive for Australia Graham Hedges said in the statement.
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Australia’s big four banks are reviewing their standard variable mortgage interest rates after the Reserve Bank of Australia unexpectedly increased the overnight cash rate by 25 basis points to 3.25 per cent.

“We’re reviewing our rates,” Commonwealth Bank of Australia Ltd spokesman Steve Batten said.

Spokespersons from ANZ Banking Group Ltd, National Australia Bank Ltd and Westpac Banking Corporation also said interest rates were under review.

The big four banks together hold about 85 per cent of Australia’s home loan market, according to Australian Prudential Regulatory Authority figures.
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Economic growth is likely to be tepid through the second half of 2009 before improving next year, a leading indicator of economic growth suggests.

The annualised growth rate of the Westpac-Melbourne Institute leading index declined 1.8 per cent in July, remaining well below its positive long-term trend of 2.5 per cent.

However, the index, which predicts the likely path of growth six to nine months into the future, has recovered from a negative reading of 7.0 per cent in May.

“The weak reads in the middle of 2009 are broadly consistent with our view that growth in the second half of 2009 will be tepid,” Westpac chief economist Bills Evans said in releasing the index.
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The Commonwealth Bank of Australia Ltd has slashed exception fees across a range of accounts, leaving ANZ Banking Group Ltd as the only big four bank not to have reduced the penalty.

ANZ chief executive Mike Smith says a review of the bank’s fee structure is underway but an announcement about any change is still weeks away.

“It’s going to be a matter of weeks not years, so it’s not going to be that long,” Mr Smith said on Wednesday.

ANZ is the only one of Australia’s big four banks still considering changes to unpopular penalty fees after the Commonwealth Bank announced on Wednesday that it would reduce exception fees.
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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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Angry bank customers have found a new place to deposit their anger.

They are hitting the world wide web instead of their bank branch and are venting online about sloppy service and interest rate rises.

A new Nielsen Online study reveals social networking sites such as Twitter are booming with people publicly expressing their displeasure.

The study measured consumer-generated media, or “buzz”, around the big four banks and found online discussion spiked following specific incidents related to banks.
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This is a defining moment in Australian banking. Two of the big four banks have opted for aggressive mortgage lending to capture market share. The other two are opting for safety. Time will tell which strategy was right.

Business Spectator financial services

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ACCC head, Graeme Samuel, has come out swinging on bank competition in the last few days. He is concerned that banking competition may be barely workable with reports that non-bank institutions are hardly active in lending markets and, indeed, of new mortgages, just two banks, Commonwealth and Westpac, have captured 85% of that business.

CoreEconomics

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Australia’s big banks will join Canada’s major lenders in the single A credit rating ranks and risk copping higher wholesale funding costs unless they pare back lending.

Analysts say Australia’s major lenders will lose their coveted AA credit rating - shared by only five other retail global banks - and slip down a notch if their high proportion of loans to deposits is not curtailed.

The recent bank reporting season revealed how the big four have grown their home loan books while also competing aggressively for household deposits to reduce their reliance on short-term wholesale funding.

Commonwealth Bank (CBA), the nation’s biggest home lender, lifted its market share by 2.15 per cent over the last 12 months to 24.3 per cent, partly by offering the lowest interest rate on standard variable mortgages of the big four.
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Ratings agency Moody’s Investors Service has downgraded to negative the ratings outlook for ANZ Banking Group Ltd, Commonwealth Bank of Australia Ltd and Westpac Banking Corporation because of the potential impact of the economic downturn.

That means Moody’s is more likely to cut the banks’ financial strength ratings of single-B, and long-term deposit and debt ratings of Aa1 over the medium term.

“The negative outlook reflects the potential for the deepening global economic downturn to have a protracted impact on the banks’ asset quality and earnings,” Moody’s senior vice president in Sydney Patrick Winsbury said in a statement on Monday.
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Life for Gary Smith, director and founder Aussiewide Financial Services, has changed dramatically over the past 12 months.

The Geelong-based broker’s business has undergone a 35 percent cut in income and like so many other brokers who see themselves as victims of lenders’ ruthless commission slashing strategies, he is concerned about rumoured further cuts.

Cuts to brokers’ commissions has always been on the cards but Smith was convinced that if this did occur only part-time brokers would be affected.

“I thought they would have looked after brokers who put in good, solid business but I was wrong in my assumption, he says.
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Westpac Banking Corporationg says its first quarter profit fell two per cent, amid challenging market conditions.

The bank on Wednesday said its pro-forma unaudited cash earnings for the three months ended December 31 was about $1.2 billion, down two per cent on the prior corresponding period. The result includes St George Bank, which it took over last year.

“Our underlying performance remains solid as we continue to support our customers in what is clearly a deteriorating economic environment,” chief executive Gail Kelly said.
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