Personal Loans: Over the last year, variable rates for personal loans have crept up with the average secured personal loan rate now 6 basis points higher, and unsecured rates a whole 39 basis points higher, perhaps reflecting an increased premium for risk. Greater Building Society sharpened its rates across all personal loans, reducing their unsecured fixed rate from 13.15% to 12.99% and now offering 8.99% for fixed new car loans.

Credit Cards: Credit card rates have been quiet recently with the only point of particular interest being Commonwealth Bank launching its Diamond Awards Credit Card. Diamond Awards has an annual fee of $425 and an interest rate of 20.74% for purchases, but you can earn up to 3 points per dollar when using the American Express card, and has a high points cap of 1 million per year.

Term Deposits: Anticipating the November RBA rate cut, term deposit rates moved sharply down. Looking over the last year paints a stark picture. While the cash rate rose 0.25% between October 2011 and a year earlier, average term deposit rates were down 0.53% for 1 year investments, 0.84% for 3 years, and 0.70% for five year terms.

Savings Accounts: In contrast to term deposits, at call deposit rates have been increasingly generous. As competition intensified the average rate went from 4.94% to 5.37% over the last year, an increase of 43 basis points compared with the cash rate’s increase of 25 basis points over the same period. Early indications are that this may not last with one of the main players, UBank, cutting its USaver bonus rate from 6.51% to 6.11% following the November 2011 cash rate cut.

Check back next month as we bring you highlights of the fallout from the latest Reserve Bank cash rate cut!

In home loans, fixed rates led the way down. At the end of September, the average 1 year rate was 6.62%, 28 basis points below where it was in August, and the average 3 year fixed rate 43 basis points lower to 6.59% over the same period. All of the major banks reduced their fixed rates in September – the biggest 1 year fixed movement was Westpac slashing its rate by half a percent to 6.69%, and NAB cut its three year rate by 45 basis points to 6.64%.

The best 1 year fixed rate for home loans of $300,000 is Greater Building Society’s 5.89%, 40 basis points lower than a month ago (which was then the lowest 1 year fixed). loans.com.au took the title of cheapest variable rate loan in the market with its dream catcher home loan, dropping from 6.69% to 6.58%.

Term Deposit rates are also on their way down, with both the market average and the best 1 year rate down by about 15 basis points. At the end of September the average 1 year rate was 5.54% and the best in the market was Beirut Hellenic Bank at 6.10%. The major banks are pulling their rates back too.  ANZ had the biggest drop in any of the big four 1 year rates over the month, a 42 basis point reduction to 5.18% .

Competition in the online savings account area has been running hot for the last year, and over the 12 months to the end of September the average Savings Account rate increased by 35 basis points, 10 basis points more than last November’s RBA cash rate increase. Going against the trend, and perhaps a sign of things to come, Westpac cut the rate on its eSaver by 50 basis points to 4.80%.

The only positive online savings rate movement Mozo saw in September was RaboDirect increasing its bonus rate offer on its High Interest Savings Account by 0.01% so it could claim equal best rate in the market (with UBank and Virgin Money) at 6.51%.

For those who live under a rock, the People’s Choice Awards are like parent-teacher night for bankers, with a dash of ‘financial Logies’ glamour. A massive 23,000 votes were cast (in the form of ratings from banking and insurance customers around Australia) to determine the best performing providers. Mozo’s election officials counted the beans and certified the results.

And the big winners?

The Greater Building Society achieved a record average rating of 9.2 out of 10, and scooped the Awards of Best Building Society, Best Home Loans and Best Savings Accounts.

ING Direct was voted Australia’s Best Bank for the second year running for its consistently competitive products, and also scooped Best Bank Accounts and Most Trusted Bank.

Victoria Teachers Credit Union was again voted Best Credit Union with a towering rating of 9.1 out of 10, and earned the extra credit of being the only provider not to receive a rating less than 5.

The top 18 providers all scored an average rating above Mozo’s ‘Fan’ score of ‘8 and above’, while the next 24 managed the ‘Fair’ score of ‘5 to 7’.

As for the losers, well, not everybody’s going to be happy with their report card. The Big Four as a group performed rather averagely, although there were winners and losers amongst them. Westpac scooped the awards for Best Term Deposits and Best Personal Loans,while the Commonwealth Bank copped a caning for its super sized home loan rate rise last November, being rated Australia’s worst home loan provider and worst Big 4 bank.

NAB marketed ‘break-ups’ and ‘asterisk-killing’ instead of mega rate rises, and won fans as a result. NAB’s average customer rating climbed to 7.1 out of 10, vaulting it to pole position as Australia’s favourite Big 4 bank.

And at the bottom of the pack? American Express gained more than a point over last year’s rating but still only managed 5.6 out of 10, while HomeSide, Citibank and GE Money each ended up with a ‘Fail’ rating of below 5 points.

The average rating for the whole class fell from 7.4 in 2010 to 7.2 in 2011, which suggests that less empty marketing hype and more real actions that benefit customers are needed in 2012.

For the full run-down of winners and losers, check out Mozo’s People Choice Awards page.

Mozo’s car insurance section is now bursting with the ratings and reviews of over 3,500 real customers from the Mozo community – rating Aussie car insurers on price, features, convenience, service – the whole shamozzle.

Now, for the first time, you can compare comprehensive car insurance on not only product features, like no claim discounts or choice of excess, but you’ll also see exactly what existing customers think of their policy.

Of course, with all those ratings also come rankings – the best and worst of the car insurance scene – and we’ve tallied them up for all to see. Check out the crème de la crème below…

Top 5 Car Insurers (with 30 reviews or more)

1. Shannons: 8.9 out of 10
2. Apia: 8.8 out of 10
3. Youi: 8.3 out of 10
4. Suncorp Insurance: 8.3 out of 10
5. Real Insurance: 7.9 out of 10

Congrats to specialist insurers Shannons, who are narrow leaders of the Australian car insurer showdown – scoring big for their “dedicated service for car enthusiasts”…

‘Pros: Easy to get to on the phone (not waiting for 1/2 hour), polite phone staff, question free claims, not bugging me every month with sales crap. Cons: A bit more expensive than the internet style insurance companies (eg: insuremyride)’ – Brenton from SA

Not far behind, Apia also scored big with their over 50s customers, whilst for the non-specialised insurers, it was great to see new players Youi and Real scoring very well. In position four, Suncorp was the first in the list of the multi-talented banking/insurance providers.

When I had an accident, YOUI were very quick in responding, the customer service person is very sympathetic and knows how to handle the situation, she was so helpful, friendly and sent me a little gift pack as I had a very traumatic experience – Michelle from VIC

We think this is a great tool for all Aussies looking for new car insurance (or just checking how their current insurers stack up against the competition). So next time that policy of yours is up for renewal, be sure to compare car insurance on Mozo.

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Join the fight! Rate your bank or car insurer now to help decide the winners of the Mozo People’s Choice Awards for 2011.

We could see no justification for this levy on business savers. Are the banks earning any less interest on business savings? We contacted several banking providers to get answers, here’s what they had to say:

NAB
Personal Savings Account: iSaver
Introductory Interest Rate: 5.75%
Ongoing Interest Rate: 4.75%

Business Savings Account: Business Cash Maximiser
Introductory Interest Rate: n/a
Ongoing Interest Rate: 0% for balances under $10K, 4.75% for balances over $10K

Difference: Intro rate: 1.00%, Ongoing rate: up to 4.75% depending on account balance

Response: The needs of business and personal customers are different. Business customers who are looking to earn interest on their cash generally look at a term deposit or more sophisticated investment vehicles. In contrast personal customers use deposit accounts more as a traditional savings account, and are therefore more focused on interest rates.

Sharna Rhys-Jones – Group Media Adviser

RABODIRECT
Personal Savings Account: High Interest Savings
Introductory Interest Rate: 6.50%
Ongoing Interest Rate: 6%

Business Savings Account: Business High Interest Savings
Introductory Interest Rate: 5.60%
Ongoing Interest Rate: 5.10%

Difference: Intro rate: 0.90%, Ongoing rate: 0.90%,

Response: Business money by its nature isn’t as sticky as personal clients so it’s priced accordingly. Due to SME’s cashflow requirements there tends to be more inflows and outflows so banks cannot rely on having long term access to the funds compared to personal clients. Therefore we price SME accounts at lower rates.

Greg McAweeney – CEO

BANKWEST
Personal Savings Account: Telenet Saver
Introductory Interest Rate: 6.15%
Ongoing Interest Rate: 5.25%

Business Savings Account: Business Telenet Saver
Introductory Interest Rate: n/a
Ongoing Interest Rate: 5.20%

Difference: Intro rate: 0.95%, Ongoing rate: 0.05%

Response: Business customers prefer other value adds over a bonus rate, such as access to a business banking specialist should they need it. Access to a business banking specialist is offered regardless of whether you have a single business savings account or a whole business package.

Tatiana Day – National Media Manager

What’s even more interesting is that not all banks treat business savers as second-class customers. And the ones that play fair say they can’t see any justification for the ones that don’t. Here’s what they have to say on the matter:

ING DIRECT
Personal Savings Account: Savings Maximiser
Introductory interest rate: 6.35% for four months
Ongoing Interest Rate: 5.0%

Business Savings Account: Business Optimiser
Introductory interest rate: 6.25% for six months
Ongoing Interest Rate: 5.0%

Difference: Intro rate: 0.10% but the longer intro period evens things out, Ongoing rate: 0%

Response: We want to offer consistent long-term value and fair pricing to all our customers. We don’t think tiered accounts are fair. Most of our business customers are SMEs looking for a simple, easy to manage online account with great rates. Businesses shouldn’t be penalised for the size of their business.

John Arnott – Director of Products

ME BANK
Personal Savings Account: Online Savings Account
Introductory Interest Rate: n/a
Ongoing Interest Rate: 5.60%

Business Savings Account: Business Investment Account
Introductory Interest Rate: n/a
Ongoing Interest Rate: 5.60%

Difference: None

Response: There is no justification for offering lower rates to business customers. All ME Bank customers receive the same fair deal whether they are individuals or businesses. Simplicity, transparency and fairness are our core principles. We don’t offer short term introductory rates, tiers, or have hidden fees and we calculate interest on every dollar, every day.

Ian Hendey, Group Executive Brand, Product and Distribution

**

What do you think? Do businesses want value adds over great rates or do they just want a fairer deal? Have your say here on tell us what you think on Mozo Answers

Aussie, ME Bank and the Greater Building Society have all advised of home loan fee increases from 1 July.

Aussie will increase the application fee on its variable rate home loans to $600, up from $250 – $500 depending on the loan type. Aussie’s fixed rate home loan fees are also rising by a total of $185.

ME Bank has introduced a new $150 legal fee and $150 valuation fee on its home loans, increasing its upfront fees by a total of $300, and the Greater Building Society will introduce a $500 application fee on all of its home loans.

The Government’s ban on exit fees was supposed to be a win for Australian homeowners and borrowers, making it easier to switch home loans and stimulate competition. But news that the smaller lenders have announced price increases, while the big banks have not, confirms fears that competition in the home loan market may be lessened not increased as a result of the exit fee ban.

Mozo’s top tip for new home loan borrowers

Use the comparison rate to check the true cost of a loan. Even if you are confronted by a large upfront fee, the interest rate is still the main factor in determining the overall cost of a loan.

Got a question on home loan fees? Ask the money mavens on Mozo Answers.

For those unfamiliar with this annual interstate stoush between the Blues and Maroons, here’s the playing field; using ‘Mozo Reviews’, Australia’s only customer review database for financial products, I’ve collated all the overall customer ratings for all banks from both QLD and NSW over the past 12 months and averaged them into one score for each state.

Having lost last year’s Rate of Origin and with their rugby-league playing companions on the receiving end of another defeat last night, can NSW banks bring home some much-needed silverware?

Let’s take a look at the lineups. With 26 providers and 6000 reviews in their squad, NSW once again came in as favourites on paper, particularly with heavy-hitters like Westpac and St. George among the Cockroach ranks. Despite coming in as defending champions, Queensland once again rank as Underdogs, owing largely to their numerical inferiority. Despite only putting 2142 reviews and 12 providers on the field, last year’s shock result means you should underestimate the proud cane toads at your peril.

In a result sure to get the xxxx’s cracking north of the Tweed Heads, Queensland has overcome adversity to take home the coveted title again (sorry Blues fans). Led superbly by stalwarts Suncorp and Bank of Queensland, and driven by outstanding individual efforts from Queenslanders Credit Union and Heritage Building Society, the banana benders won with a score of 7.65, a 0.31 increase on last year’s winning effort.

NSW did manage to lift their game, an 0.18 improvement boosting them to a score of 7.09. Despite their loss, there were several valiant efforts in a losing side, most notably from Greater Building Society, Newcastle Permanent and Teachers Credit Union. Once again, the post-match autopsy points to the performance of the senior players, namely Westpac and St. George, who once again let their state down. Interestingly, if you remove those two from the equation, NSW’s overall rating skyrockets to 8.1, making the defeat a bitter pill to swallow for the rest of the Blues side.

With Origin done and dusted for another year, it’s time for both teams to start rebuilding their sides. I implore everyone to do their part and get behind your state and rate your bank – it’s the only way to give your team a chance at Origin glory in 2012!

On face value, it seems like a smart decision from NAB. Attempting to shed the image shared by the ‘Big Four’ could only help it’s stuttering financial performance and doing so by shedding fees and lowering rates is also a great step. However, could this move backfire in the long term?

By breaking up with their illustrious rivals, NAB’s losing its one key positive attributes – being better than the rest of the Big Four. Amongst their former brethren, over the past 18 months NAB had managed to position itself as the cheaper alternative with lower rates and less fees. Now having ‘broken up’, it opens them up to greater comparison with challenger brands, the likes of ING Direct, Aussie and RaboDirect, who have been doing this for a long time anyway. And this comparison isn’t pretty reading, particularly when looking along at the home loan battleground where the bulk of this banking war is being fought.

For example, NAB may have the lowest rate standard variable home loan out of the Big Four, but compare it to the rest of the market and they rank a lowly 36th out of the 58 different providers’ standard variable loans we have on our site. If you go on to take upfront and ongoing fees into account by sorting by comparison rate, they sink even further, plunging to 43rd on our list – though still above Commonwealth, Westpac and ANZ I might add.

Which leads to the wider problem with NAB’s strategy. I applaud its moves to cut fees and interest costs and I enjoy the fact that it’s trying to reignite competition in the consumer banking marketplace. The problem is, if everyone starts surveying their options and voting with their feet, will NAB be the winner? Who says an irate Commonwealth Bank customer is going to land up on NAB’s door when they can go a bit further down the road and get an even cheaper home loan? Moreover, what’s to stop NAB’s customers doing the same? Mutuals and Non-bank lenders on average still have far lower rates and fees.

If everyone starts looking for the best deal, NAB’s got a battle it can’t win. Not yet anyway. Breaking up may be hard to do, but only time will tell if it was the right thing to do.

Compare home loans at Mozo.

It’s all part of Choice’s Better Banking campaign to promote competition among banks and give people better options for their banking needs. Which has pretty much been Mozo’s reason for being these last two years, so it’s great to find a soul mate.

The new mozo powered ‘Compare, Ditch and Switch’ service  enables Australians to objectively compare credit cards, home loans, savings products and transaction accounts from 89 banks, credit unions, building societies and non-bank lenders. Visitors to the site will also have access to our award-winning Health Check tool that instantly compares an existing home loan or credit card against the rest of the market.

“It’s exciting to combine Choice’s strong consumer voice with Mozo’s banking comparison engine and personalised comparison tools,” said Better Banking campaign director Richard Lloyd. “More mobile and discriminating bank customers help make a more competitive banking system for everyone.”

Visit the new Compare, Switch and Ditch site and let us know what you think via the feedback button.

We love a good personal crusade here at Mozo HQ. So when we recently received a passionate plea from a concerned citizen questioning why internet fund transfers aren’t in real time, we thought it was worth publishing and doing some number crunching to figure out what the delay adds up to.

Here is the full article:

All internet funds transfers should be in real time.

The Banks have a privileged position in the economy being a necessity for the flow of funds through the market. Their privilege is not matched by their overweighted focus on results for the shareholders as opposed to the better good of the country. Their protests that margins have to rise to keep the banks strong and therefore benefit the community are difficult to accept when there is likely greater benefit to the economy by their measured increases in rates similar to the RBA. The out of order rise from the CBA is more an indicator that that Bank got it wrong with their risk management and we are paying for it.

There is much comment lately about how the Banks need to treat the customer fairly. There are different ways this could be addressed. My crusade for fairness is to enable all electronic transactions to be real time. For example when you make a funds transfer on the internet to pay a bill or a BPay transaction to pay a bill it should not take 1, 2 or 3 days to arrive at the destination.

Let the Banks try that trick at the supermarket checkout! It could take several days to complete the shop because we would have to wait for the funds to arrive at the Woolies or Coles account. That is not going to happen.

The Banks have the systems to achieve this now. The real time gross settlement system will allow this. Oh I forgot, you can go to your bank and request such a transfer to another person’s account if you want to pay a fee of about $35.

EFTPOS transactions are immediate. The transfer is completed while we wait. Money has moved from my account to another account because I authorised it. Why does that not happen with internet banking for individuals and business? I know there are businesses large enough that they have systems through the Bank that allow this but this must be made available to all.

Why, because the Bank has taken the funds from my account and only once they have finished investing it overnight or for three days to squeeze every last earning out it will the Bank allow it to continue on its journey. Why do I wait for three days for my funds to arrive? That is costing me interest if it is paying a credit card. If the debit is from an overdraft then it is costing me at both ends.

If the Banks are the conduit, the pipe is blocked and needs a clean out. Regulate that if there are clear funds in an account that a funds transfer to another account should be real time.
– ends –

And what about the numbers?

Let’s take UBank as an example. It recently announced that it has $5 billion in deposits. It seems common for UBank to have a 3 day delay coming in or out. All $5 billion had to get in there, and will come out again at some point, and so it loses up to 6 days of interest. At UBank’s 6.51%, that’s over $5 million [edit: $2.5 million - see comments below] windfall to the banks – and that’s just on the money in UBank.

Does that sound fair?

Compare banks at mozo.com.au