Swan's banking reform school
Following months of rate hikes and reform hype, the Government has unveiled its bank reform platform. So will you be winner?
We glance through the package to see what’s in, what’s hot, and how you can save thousands on your mortgage now.
1. Ban on exit fees
This reform won’t be widely helpful, as it only applies to new mortgages from July 1, 2011. The Government appears to acknowledge that exit fees are damaging to bank competition, but isn’t prepared to take a hard line to help out existing mortgagees.
The verdict: Mozo suspects that when one fee is abolished, another fee – or higher interest rate – is born. This also poses a big risk for smaller, non-bank lenders.
- Beat the exit fee scam: our home loan comparison calculator crunches your numbers to show how much you could save from switching mortgages. If it’s greater than your exit fee – and the average saving is a whopping $35,000 – you win!
2. Account number portability
Just as you own your phone number, you may one day own your account number. It does nothing to help you figure out which credit card / mortgage / transaction account is best, but will spare us the pain of transferring automated payments and the like.
The verdict: Since Mozonians have their fingers on the bank pulse, such as it is, this will save us a little hassle when we switch over to a better deal.
- Port-ho! Find yourself a fee-free, feature-friendly bank account to move into with ease.
3. Mortgage key facts sheet
Some of the invaluable money info Mozo has been providing for two years – monthly repayments, total cost – will have to be provided by banks.
The verdict: Nothing new here – although Mozo also gets a mandatory mention as a comparison site extraordinaire.
- Check out our Australia-first rate change calculator to see how further interest hikes could affect your repayments.
4. Credit card and ATM reforms
Instead of proposals we were offered a “taskforce” to delay any actual changes while appearing entirely proactive.
The verdict: Swan dive.
- Beat ATM fees and sneaky credit card traps: find out what real customers think of their cards!
5. The mutual sector
The theory here is to encourage competition by supporting mutual lenders and smaller banks through protected deposits and other measures.
The verdict: While competition is key to better home loan deals, the general feeling is that big banks will also benefit – and continue to dominate without further reform (whence a $3.4 billion gain in the Big Four’s share prices).
- Give your home loan a health check to see if you’re paying your lender a sickening amount in interest and fees.