Trending Financial News 1 November
Active borrowers get rewarded with bigger rate cuts
Borrowers have given themselves an extra 0.05 percentage points in home loan rate cuts by comparing rates and switching lenders. Since the Reserve Bank started cutting rates in June, home-owners on average mortgages have saved an average $2056 a year in rate cuts and better rates from switching.
The RBA said there has been an apparent rise in the number of home owners switching banks to smaller lenders. There has also been increased number of borrowers asking for better rates from their bank.
The major banks have passed on interest rate cuts of about 0.60 percentage points on average, while the RBA has cut official rates by 0.75 percentage points.
However, the RBA says borrowers have received rate cuts averaging 0.65 percentage points.
Empowered borrowers deserve more rate cuts says Frydenberg
The treasurer Josh Frydenberg said borrowing costs for the banks have continued to fall dramatically and repeated his call for the banks to pass on more rate cuts to borrowers.
“The banks’ cost of funds have come down substantially in recent times,” said Mr Frydenberg, “hence the Morrison government’s call for the 75-basis-point cut to the RBA cash rate to be passed on to customers in full.” the Treasurer said.
“The government and RBA have been calling on customers to seek best possible deal and if still not satisfied, to take their business elsewhere.
Growing competition in the banking sector means consumers should feel empowered said the Treasurer.
Building approvals bounce back in September
The Australian Bureau of Statistics reported that building approvals rose 7.6 per cent in September, against the trend of falls throughout 2019.
Approvals for private houses rose 2.8 per cent in September while apartment approvals rose 16.6 per cent over August.
Housing Minister Michael Sukkar said rising dwelling approvals is welcome news.
“The government’s focused on getting on with the job of delivering on our plan to build a stronger economy so we can help even more Australians realise their dream to own a home sooner.”
73,000 Aussies complained about their bank last year
The Australian Financial Complaints Authority received more than 73,000 complaints last financial year, up 40 per cent on previous years. AFCA resolved 77 per cent of complaints received and paid out $185 million in compensation.
Only 3 per cent of Australians are aware of the financial ombudsman, AFCA.
About one third of complaints were about banks, 44 per cent were about credit.
ANZ is paying $1.6B in compo to customers
ANZ Bank has 1,000 employees working on its customer remediation program. ANZ chief executive Shayne Elliott yesterday could not say when the remediation program would come to an end.
“I can’t say when we will be finished,” said Mr Elliott yesterday.
The remediation charge for the financial year was $682. The total charge since the program began in 2017 is $1.6 billion.
Elliott said ANZ Bank staff were reviewing the bank’s loan and account products.
“We’ve found a number of issues and we are well advanced. We have not finished that work.
“Then we have to get the money back to the customer.”
ANZ losing mortgage market share
ANZ reported a 3 per cent fall in Australian home loan balances during the year to September 2019. Credit card and personal loan balances also fell sharply.
ANZ’s share of the Australian home lending market fell from 15.5 per cent to 14.3 per cent over the 12 months to September 2019.
ANZ’s Qantas points and David Hasselhoff home loan promotions in 2019 resulted in a 30 per cent improvement in ANZ home loan sales int eh second half of the reporting period.
Offset popular as interest-only fades away
The proportion of ANZ Bank home loan borrowers paying interest-only on their mortgages has fallen from 31 per cent in 2016/17 to 15 per cent today said ANZ chief financial officer Michelle Jablko.
There has been a substantial increase in the number of borrowers paying more than the minimum loan repayments with the proportion of borrowers ahead of schedule increasing from 71 per cent in 2016/17 to 76 per cent today.
ANZ Bank is holding $27 billion in offset balances, about 10 per cent of its home loan portfolio.
House prices surge in October
House prices in Australia have surged upward in the biggest jump in home values since 2015 according to CoreLogic.
Melbourne prices jumped 2.3 per cent in October, the biggest monthly rise since 2009 and have grown 5.5 per cent over three months.
Sydney prices grew 1.7 per cent during October and are up 5 per cent over the past three months.
Nationally home prices increased 1.2 per cent in October 2019.
Brisbane prices went up 0.8 per cent in October, Adelaide was up 0.4 per cent, Canberra up 0.6 per cent and Darwin up 0.3 per cent.
Perth prices fell 0.4 per cent.
How much have Sydney and Melbourne house prices fallen?
Melbourne home prices are currently sitting 5.8 per cent below the peak of the market in 2017. Sydney prices are 10.4 per cent lower. Property prices in Sydney and Melbourne surged higher in October. CoreLogic’s Tim Lawless there was a real possibility prices could reach 2017 levels again by early 2020.
“The national market is still down 5.7 per cent,” said Time Lawless.
Mr Lawless said October’s big price gains would be hard to sustain in the longer term. However demand is likely to return stronger in the new year following the introduction of the first homebuyer deposit scheme for 10,000 market entrants from January 1.