Backlash against big four
FED up with rising interest rates, a growing number of home owners are escaping the stranglehold of the big four banks by signing mortgages with smaller financial institutions.
Australian Prudential Regulatory Authority figures show that in 2011 the number of new mortgages signed at smaller banks grew by 14.8 per cent. New mortgages taken out with the big four - Westpac, Commonwealth Bank, ANZ and National Australia Bank - grew 7.8 per cent.
The trend indicates a growing public frustration with the major banks - especially Westpac, which despite posting a record profit of $6.3 billion for the year to September 2011, announced staff cuts last month and, along with ANZ, an unexpected interest rate rise on Friday.
Illustration: Matt Golding
The vitriol and criticism towards Westpac has sent the bank into damage control, with negative comments posted on its Facebook page over the past week being deleted within minutes, prompting accusations the bank is on a ''propaganda campaign''.
In a further clampdown, Westpac has introduced a new social media policy that bans full-time staff and contractors from disparaging their employer on sites such as Facebook and Twitter. Staff who fail to comply with the bank's strict guidelines could face dismissal or legal action.
A Westpac spokeswoman yesterday did not deny that the bank was censoring its social media sites by removing negative commentary and remarks.
Politicians have also vented their anger, with Prime Minister Julia Gillard and Treasurer Wayne Swan yesterday urging customers not to simply accept the move by Westpac and ANZ to raise their interest rates independently of the Reserve Bank.
''The fact is there are better deals around and if customers are unhappy with their financial institution, I urge them to … think about changing,'' Mr Swan said. When asked if the big four banks were bastards, he said: ''They are out of touch with their customers, they are treating their customers badly.''
The major banks hold about 90 per cent of the home loan market - they have a combined mortgage book of $586.5 billion - but Treasury estimates the value of the mortgages held by the smaller banks has grown by $9.7 billion. Ms Gillard reminded customers that since the federal government's ban on mortgage exit fees came into effect last July, it had ''never been easier'' to switch banks.
Commonwealth Bank and NAB are yet to announce whether or not they too will raise their rates, but a NAB spokesman said it was committed to having the ''lowest standard variable home loan rate of the major banks''.
The Commonwealth echoed the line that its rates were under review, as did the Bendigo and Adelaide Bank.
Only the Bank of Queensland said it would keep its standard variable home loan interest rates steady.
AMP Capital chief economist Shane Oliver said it was likely other banks would take Westpac's and ANZ's lead.
''When one moves, the others tend to follow,'' he said.
''The last thing Australia needs right now is mortgage rate increases and that's what we've ended up with.''
Housing Institute of Australia managing director Shane Goodwin blasted the banks' decision, deeming it ''unjustifiable'' and a ''huge blow to confidence''. Westpac and ANZ, however, argue the rate rises were needed because they are facing higher costs as a result of increased competition for new deposits.
But Westpac's censorship of social media is a sign of its increasing sensitivity to criticism, following fury over its decision to retrench up to 560 local staff, and now raise rates.
Westpac has defended the practice, claiming that ''partisan views'' could deter customers from researching financial products promoted on the sites.
The Financial Sector Union has responded by establishing a rival Facebook page, which provides a forum for staff and customers to vent their anger.
The Westpac spokeswoman did not deny that comments had been removed from the company's website, but said all feedback was circulated to senior management. With
with STEPHEN CAUCHI