Just a few short weeks after the Reserve Bank of Australia cut the official cash rate by 0.25%, new research gathered by Mozo has revealed that a huge 70% of Aussies no longer trust the big four banks.
Half of that figure cited the big four’s failure to pass on the full October RBA cut to their customers as the reason for their concerns, with the average big four bank passing on just 0.14% of the cut to its home loans. That’s a significant 11% less than the full cut and 1% less than the average 15% home loan rate cut passed on by all Aussie home loan lenders in the Mozo database*.
By choosing not to pass on full RBA rate cuts, the big four banks have shockingly pocketed $4.7 billion in additional revenue since 2016.
Aussies borrowers ready to walk away from major banks
Despite the fact that the major banks still collectively hold 75% of residential mortgages across Australia, Mozo’s research has shown that the perception of the big four is changing in the court of public opinion.
As Mozo Director Kirsty Lamont said, “Australians are making it crystal clear that they are not impressed with the big banks, with 62% saying that the big four are putting profits before customers.”
1 in 4 of the 1,036 big bank customers who took part in Mozo’s survey, even revealed that they had already started switching away from or fully intended to leave their bank following the October RBA cut. In context, that could be a pretty hefty 4.9 million Australians who are thinking of moving on to greener pastures.
Borrowers turning to online banks for better value
So where are all these borrowers going? Does the term online lender sound familiar? Well that’s where half of Aussies who took part in Mozo’s survey, said they would consider going after the rate cut. And while some listed security, convenience and lack of knowledge of other lenders as their reason for failing to make the change just yet, lower interest rates and lower fees were recognised as a big plus for opting to go with an online lender.
RELATED ARTICLE: Meet the online lenders saving Aussies millions
In fact, we figured out that the average Aussie could save a staggering $75,000 on a $300k owner-occupier principal and interest loan over a 30 year period, by choosing to opt for an online home loan lender with a competitive rate rather than a home loan with one of the big four.
“Only 19% of Australians believe that the big banks are doing what is necessary to stay afloat in the wake of the rate cuts, leaving a massive 80% unimpressed with big bank behaviour. The writing is on the wall for many borrowers and now is the time to find the most competitive rate on the market and reap the rewards,” concluded Lamont.
How can you find a more competitive home loan?
If you’re at a loss for where to start, here are a few things you can do:
- Take a look at Mozo’s home loans comparison page. Interest rates on this page are updated daily and you can even enter the amount you want to borrow and the loan term, to see what home loans might best suit you.
- Use Mozo’s switch and save calculator to see how much you could be saving by switching your current home loan.
- Show your current lender your findings and push for a lower interest rate on your current home loan.
- If your current lender isn’t willing to budge, or their offer doesn’t excite you that much, then think about switching. Just remember to be wary of honeymoon rates, one-off deals and any fees that might be involved with breaking from your current home loan.
Or if you want a quick scroll of what else is out there, take a look at the home loan options below with competitive interest rates.
Compare home loan deals - last updated January 16, 2021
*Average correct as of Monday 21st October, 2019.
^See information about the Mozo Experts Choice Home Loans Awards
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