Mutuals cheaper than big banks

The major banks have increased their variable mortgage rates by between 0.29 and 0.35 of a percentage point, but only eight out of 146 credit unions and building societies have lifted their rates by more than the Reserve Bank's quarter of a percentage point increase in the official cash rate. The peak body for the mutual banking sector, Abacus Australian Mutuals, says that they have two distinct advantages over banks. "Firstly, our funding is largely drawn from household deposits rather than being totally reliant on the wholesale markets like non-{APRA} regulated lenders," said chief executive Louise Petschler. "Secondly, because we are mutuals, we don't have the same conflict between shareholder and customer interest that banks do – our members are our owners so we can just focus on them." The average variable rate for credit unions is around 8.65 per cent, and 8.84 per cent for building societies, compared with 9.32 per cent for the major banks.

Source: The Australian Financial Review