Non-bank lenders grab bigger slice of market
|Jessica Wright | Sydney Morning Herald | February 20, 2011
Credit unions and building societies have claimed their largest slice of the banking market in more than a decade as the industry digs in as the “fifth pillar” of the nation’s finance sector.
As the war between Australia’s big banks over home loan customers continues, data from the December quarter shows credit unions have secured more than 10 per cent of the market, their best result in 12 years.
The result follows increased guarantees for non-bank lenders put in place by the federal government last year as part of banking reforms designed to boost competition.
Chief executive of Abacus – the representative body for credit unions, mutuals and building societies – Louise Petschler said the acceleration in the mutual market was proof customers were voting with their feet.
“Consumers are clearly seeing that credit unions and building societies are strong alternatives to the big banks and that switching is not as hard as you think,” she said.
Meanwhile, the NAB has reported a strong response to its aggressive pitch to borrowers of other banks, offering them $700 to switch.
A spokeswoman said the bank had been flooded with inquiries since launching its “we’re breaking up with the other big banks” campaign to woo customers from ANZ, Westpac/St George and the Commonwealth.
In response, Westpac dropped its mortgage application fee and cut interest rates on some home loans by 0.8percentage points and, on Friday, the Commonwealth promised $1200 to NAB home loan customers who were prepared to make the switch.
Speaking to The Sun-Herald from Paris, Treasurer Wayne Swan welcomed the “scrap between the banks”, saying the government’s reform package had helped “kick-start competition in the banking sector by making it easier for every Australian family to … get the best deal”.
But chief executive and founder of non-bank lender intouch Home Loans Paul Ryan said it was the banks’ customers who “were having to foot the bill for the ongoing theatrics”.
“If [the Commonwealth Bank] really wanted to demonstrate that it is in touch with Australian consumers, and clearly it has the cash to do so, then it would drop its current interest rates by at least 10 points to help its existing customers,” he said.