Trending Financial News 11 July
The end of the comparison rate?
The competition regulator will introduce a new “online tool to improve the transparency of the mortgage interest rates paid on new loans” according to the quarterly report of the Council of Financial Regulators released yesterday.
This online tool, first described by the Productivity Commission last year as a “a calculator based on actual interest rates charged” will produce an “indicator rate” for home loans that will better represent the real costs of the loan.
The comparison rate for mortgages in Australia is based on a calculation combining the headline interest rate plus fees and charges to produce a rate encompassing the full costs of the loan.
Headline rates don’t reveal the cost of your home loan
Australian financial system regulators have announced a new online calculator tool that will give borrowers greater insight into the real costs of their home loan.
Headline interest rates are “a poor guide to the interest rate most borrowers actually paid,” the ACCC’s Residential Mortgage Price Inquiry in December 2018 found.
“It is not informative for borrowers to compare headline interest rates when shopping around for a lender.
The ACCC found that typical big bank borrowers “were, on average, paying interest rates well below the relevant headline interest rate.”
The downside of these big bank ‘discounts’ off the headline interest rate is a problem according to the ACCC.
“Framing of mortgage interest rates as an alleged ‘discount’ in this way exploits consumers’ bias.”
Thousands of bank customers can claim compo
Thousands of Australian bank customers who have old complaints that have never been resolved are now able to apply for compensation or resolution of their dispute.
The Australian Financial Complaints Authority has extended the time period it allows for old complaints to be lodged from five years to 11 years.
The extended time period matches the period of time examined by the Hayne Royal Commission into the banking industry. Customers who have been alerted to issues raised by the Royal Commission have until 30 June 2020 to make a claim against their bank or lender for matters that have occurred anytime since 2008.
AFCA is expecting a big surge in old complaints in the next few months. AFCA reported that it heard 30,000 complaints in the five months to March 2019, awarding $67 million in compensation to customers.
“We have identified thousands of complaints that could potentially be made,” said chief ombudsman and CEO of AFCA, David Locke.
ANZ hits back with 300,000 QFF points
ANZ Bank’s falling mortgage market share could be about to turnaround with a major new promotion giving away 300,000 Qantas Frequent Flyer points to successful home loan applicants who borrow more than $300,000.
Australian Prudential Regulation Authority statistics reveal that ANZ’s mortgage portfolio declined by about $800 million in May 2019. In the first five months of 2019, ANZ’s home loan portfolio contracted by $3.2 billion.
To get the 300,000 points, apply for an ANZ home loan by 31 August 2019 and settle by 31 January 2020. (terms and conditions apply).
Compare home loans from Australia’s banks, credit unions and non-bank lenders at InfoChoice.