Big bank home loans complicated, not competitive: ACCC
By business reporter Stephen Letts
The big banks’ home loans are opaque, not competitive, and ‘no frills’ mortgages do not necessarily mean cheap, according to the Australian Competition and Consumer Commission.
The ACCC’s interim report from its Residential Mortgage Inquiry puts the banks under even more pressure as they struggle to defend questionable lending practices being uncovered at the banking royal commission.
The interim report found opaque pricing of discounts offered on residential mortgage rates made it difficult for customers to make informed choices.
The ACCC inquiry focuses on the big four banks, as well as Macquarie Bank, which together account for about $1.3 trillion, or 84 per cent, of outstanding residential mortgages in Australia.
The ACCC said the big banks appeared more interested in maintaining the current positions than offering borrowers a real choice.
“We do not often see the big four banks vying to offer borrowers the lowest interest rates,” ACCC chairman Rod Sims said.
“The discounting by the big banks lacks transparency and it’s almost impossible for customers to obtain accurate interest rate comparisons without investing a great deal of time and effort.
The report also found the average interest rates paid for basic or ‘no frills’ loans were often higher than for standard loans at the same bank.
“We think many customers who opted for ‘basic’ or ‘no frills’ loans thinking they are saving money would be surprised to learn they might actually be paying more,” Mr Sims said.
More to come.
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