“Westpac are greedy and guess what, you do care”
Earlier this month, Australia’s largest mortgage broker reported that a “large proportion” of its home loan business in December, came from Westpac customers switching to other lenders in protest at the banks oversized rate boost.
In case you missed it, Westpac put up their home loan rates by .45% where the Reserve Bank of Australia only put it up by 0.25%. You might remember the banana smoothie advert/ email that they sent to their customers.
We in Australia have been taking so much flack from our banks over the years. High bank fees, ludicrous bank fees (e.g. a cash handling fee), home loan rates that go up two days after a lift in interest rates but then taking 11 days to come down after a fall in interest rates. ATM fees of $2.00 a transaction, monthly bank account keeping fees, credit card interest above 20% and credit card fees that you need to be a rocket scientist to work out. Normally they have done this with impunity. People being lazy or not caring have not put these banks in their place. And because of our silence as a nation, we have let them steamroll us into untold revenue for their shareholders.
So when I first heard about Westpac doing this, it is just something else we will have to deal with and pay. I was convinced that people would huff and puff but not much would happen or change.
I’m so happy that it seems that people are standing up to Westpac. Changing their home loan over to a different bank is sending them a message. Believe me this does not just send Westpac a message; it sends all banks a message. There are customers willing to do the hard yards to change to a different bank if their bank pushes them too far. And in this case it does seem that Westpac has pushed them too far.
What this action does is keep the banks honest. It keeps them in line and shows them that you can only treat people like numbers instead of customers for so long.
What I like most about this situation is that people are switching their home loans. Home loans are probably the most difficult product to switch. Credit cards, savings accounts and personal loans are difficult; however home loans take the most time, paperwork and possible fees to switch. These customers have all endured some time and pain to send a clear cut message.
The biggest secret that all four banks don’t want you to know is that while there are four of them, they operate in a relative duopoly. This means if you leave one you simply join with one of the other three. So the banks, as long as they do everything as a foursome (e.g. putting up rates together at once) you could leave your current bank but more than likely you would be going to a bank that is doing the same thing.
In this case, Westpac went out and did it alone. None of the other banks followed and that’s why people have chosen to move. Congratulations again to the people that changed from their Westpac home loan.
Thanks
Adam Goulding (Also known as Mr Home Budget)
