Mortgages. Why people are dissatisfied with the banks, and why the banks don't care..

Mortgage rates may rise above any official cash rate increase, according to many banks. The Government does like it, customers don't like, but the banks don't care. They have us "by the short and curly's."

You may have read the recent report by Choice that the big banks in Australia are on the nose with their customers.

People like the fact that we have a stable banking and financial system, and that their banks have been the rock in the global financial crisis.

But I guess its something that Australians expect from their banks.

The thing that gets under our skin is that Australia's Banks are the most profitable in the World, and while we can't deny they are well run, the real reason for this is the lack of mortgage competition that Banks face in Australia.

And that will lead to the banks taking their customers for granted. And in my opinion they do just that.

The fees and charges that they have been charging us for the last ten years or so, have in fact been in my view unlawful.

But we have let them get away with it, so they get on adding them.

Building societies and credit unions on the other hand are well liked by their customers.

They treat their customers as if they owned the business, and they do. Once you have an account with a building society or credit union, you become a joint owner of that organisation.

Banks do have mission statements that make their customers 'stakeholders'. This however is often meaningless when the share prices take a hit, and the the top officers of the banks get rewarded when share prices rise. And the easiest way to do that is to make more profit on every customer.

What we need to do is to tell the banks when we are not happy, and if you are not heard, then to move your account.

More competition in the Mortgage space is required.

The Treasurer Wayne Swan has been sniping at the banks about mortgage rates, and trying to hold them to official rate rises only.

But customers making a stand and competition are the key to lower mortgage rates.

You probably didn't notice, but Australia's mortgage brokers and securitised mortgage lenders have become largely irrelevant leading up to, and during the Global Financial Crisis. They just couldn't rise the funding to remain competitive with the banks.

Wayne Swan is trying to support the securitised mortgage lenders and has just pledged a further $8 billion dollars for mortgage funding. But that is just a drop in the bucket.

We need to understand that more is required.

Mortgage competition has collapsed in Australia

Mortgage brokers have gone from 40% share to 20% share of the mortgage market, and worse, mortgage originators have fallen from around 25% to just 2.5% of the mortgage business in recent times, and that is the issue.

There is no reason for banks to worry over the next two or three years. The competition has been vanquished and there is no one on the horizon to challenge them.

So what will you do about it? Get your bank to reduce your fees, move to a building society or credit union, get your loan refinanced by a mortgage originator, or just cop it sweet?

Credit unions get personal

Big banks don't like personal loans, they are small and you can't make a lot of money and there is no security offered. So it's good to have a customer-friendly alternative for those car loans and other unsecured loans.
As the banks losses in other areas start to sink in, banks and other financial institutions have become increasingly reluctant to provide certain types of loans, pulling back on marketing unsecured finance - personal loans and credit cards to get the balance of risk and return redressed.
If you are looking for a loan to finance a car, renovate the home or an overseas holiday, you might have to be prepared for some legwork.
Recent figures show consumer lending has slowed dramatically in recent months. This trend results from a combination of factors including consumers tightening their belts and reducing their borrowings and lenders tightening their lending criteria.
In one example, the Queensland insurance and banking group Suncorp reported its consumer lending business was down more than 6 per cent in the September quarter.
The trend is evident across the industry. Reserve Bank figures show personal lending fell in each of the five months from June to October, a level of weakness that has not been seen for 15 years.
One group of institutions still open for business is credit unions. Their executives believe the times suit the way they do business, providing member services at reasonable cost.
Queensland Police Credit Union executive manager corporate services, Stephen Howell, says: "The credit union sector has been relatively undamaged by large jumps in bad debts the banks have experienced. It is business as usual for us."
SO if you are looking for a personal loan, try your friendly credit union.

Queensland credit unions announce merger proposal

The boards of the Queenslanders Credit Union and Ipswich-based Discovery Credit Union have announced a proposal to merge.

A proposal - which would create a new credit union with about $400 million in assets, eight branches and 80 staff - will be put to members of both credit unions at their respective annual general meetings in November.

The agreement ensures all staff will be retained and all existing branches will remain open. The merged credit union will trade under the new name Queenslanders Personal Banking.

The merger will also need approval from the Australian Prudential Regulatory Authority (APRA) and other relevant regulators.

Under the merger agreement, Ross McDowell, CEO of Queenslanders Credit Union, will be the CEO of the new organisation and the current management team of Discovery will be part of the new management structure.

John Weier, the general manager of Discovery will be the deputy CEO of the new credit union and will continue to play a major role in the development of the organisation in the greater Ipswich area.

All Discovery directors have been invited to join the board of the merged credit union.

"Discovery Credit Union has been proud to support many local sporting and community groups through ongoing sponsorship programs and this will not change if the merger proceeds," Mr Weier said.

"As all of our staff and branches will be retained, members will not notice any change except for the name."

In a joint statement, Mr McDowell and Mr Weier said the boards of both credit unions had recognised the potential for growth in the Ipswich area.

"(We) believe the merger will create a financially strong regional credit union with sufficient size to ensure that it can continue providing friendly, personalised service to members," they said.

"In addition, having the economies of scale of a large financial institution will allow the merged credit union to take advantage of the opportunities that are available in the western corridor due to the strong local economy and continuing development."